BHARAT HEAVY ELECTRICALS LIMITED
ANNUAL REPORT 2009-2010
DIRECTOR'S REPORT
To
The Members,
We are delighted to present our 46th Annual Report on the business and
operations of the Company for the year ended March 31, 2010.
FINANCIAL PERFORMANCE Financial Year
(In Rs. Crore except per share data) 2009-10 2008-09
(a) Turnover 34154 28033
(b) Profit before depreciation, 7083 5214
interest & tax
(c) Less: Depreciation 458 334
(d) Less: Interest & Finance charges 34 31
(e) Profit before tax 6591 4849
(f) Less: Provision for Taxes 2280 1711
(including deferred tax &
Fringe benefit tax)
(g) Profit after Tax 4311 3138
(h) Add:/(less) Statutory appropriation 1 1
(i) Distributable Profit 4312 3139
(j) Add: Balance brought forward 595 430
from the previous year
(k) Balance available for appropriation 4907 3569
i) Dividend (including interim 1141 832
dividend)
ii) Corporate Dividend tax 191 142
(incl. on interim dividend)
iii) Amount transferred to 3000 2000
General Reserve
(I) Balance in P&L account to be 575 595
carried forward
(m) Earnings per Share (Rs.) 88.06 64.11
(n) NAV per share (Rs.) 325.16 264.32
(o) Economic Value Added (Rs. crore) 2670 2008
FINANCIAL HIGHLIGHTS:
During the year, the company witnessed a healthy growth in Turnover by
21.83% to Rs. 34154 crore from Rs. 28033 crore in the previous year. The
Turnover (net of excise duty) increased by 25.37% from Rs. 26212 crore in
2008-09 to Rs. 32862 crore in 2009-10. Profit before Tax for the year 2009-
10 is placed at Rs. 6591 crore as against Rs. 4849 crore during 2008-09, a
growth of 35.92% as compared to previous year. Profit after Tax is placed
at Rs. 4311 crore as against Rs.3138 crore during 2008-09, a growth of
37.38% over previous year.
Increase in turnover coupled with savings in material cost over previous
year have contributed to the better financial performance during the year.
The changes in estimated contract revenue and estimated contract cost for
AS 7 (R) contracts under execution in 2008-09 and continuing in 2009-10 is
(+) 0.62% and (-) 2.43% respectively, with the consequential impact on
turnover.
The wage revision settlement with employees has been finalised during the
year. The arrears due from 01.01.2007 to 31.03.2009 amounting to Rs.
2087.51 crore (Net of Rs. 798.59 crore Ad-hoc and 50% DA merger impact
accounted up to 31.03.2009) have been charged to Profit and Loss Account
and provision available up to 31.03.2009 amounting to Rs. 1749.34 crore has
been withdrawn in the Profit and Loss Account.
Net worth of the company has gone up from Rs. 12939 crore to Rs. 15917
crore registering an increase of 23.02%. Net Asset Value(NAV) per share has
increased from Rs. 264.32 in 2008-09 to Rs. 325.16 in 2009-10.
DIVIDEND:
The Board has recommended a Final Dividend of 123% (Rs. 12.30 per share),
Rs. 602.11 crore, for the year 2009-10. An interim dividend of 110% (Rs. 11
per share), Rs. 538.47 crore, on share capital of Rs. 489.52 crore, has
already been paid for the year 2009-10. Thus the total dividend payment for
the year 2009-10 is Rs. 1141 crore (exclusive of dividend tax) as against
Rs. 832 crore paid in the previous year.
Provision of Rs. 100 crore has been made for Corporate Dividend Tax on the
Final Dividend proposed. Corporate Dividend Tax of Rs. 91 crore has already
been paid on the interim dividend.
ORDERS RECEIVED:
Orders worth Rs. 59037 crore were received during the year as against Rs.
59678 crore in 2008-09. Sector-wise orders booked are as follows:
(Rs. in Crore) 2009-10 2008-09
Power Sector 41982 47167
Industry Sector* 13484 9245
International Operations 3571 3266
Total Orders Booked 59037 59678
Order Book outstanding 144300 117000
at the end of the year
* Excludes Inter Sectoral Orders
RATING OF BHEL VIS-A-VIS MOU TARGETS:
Performance of BHEL for the year 2008-09 has been rated as 'Good' in terms
of MoU signed with the Government of India. BHEL has been awarded the MoU
Composite score of '2.64'. Two major aspects that impacted the company's
performance during 2008-09 were: enhancement in provisioning for wage
revision and steep increase in cost of input material procured by the
company. However, except in 2008-09, BHEL was rated 'Excellent' every year
from 2001 -02 onward.
The MoU rating for 2009-10 is under finalisation by the Government of
India. However, company's own assessment places performance of the company
in 'Excellent' category for F.Y. 2009-10.
MANAGEMENT DISCUSSION AND ANALYSIS:
A report on Management Discussion and Analysis is placed at Annexure-1.
BOARD OF DIRECTORS:
Appointment:-
Shri B. Prasada Rao, the then Director (IS&P), BHEL was appointed as
Chairman & Managing Director, BHEL w.e.f. 01.10.2009 vide Order No. 1
(4)/2008-PE.XI. Pursuant to Orders from DHI, Shri B.P. Rao is holding
additional charge of the post of Director (IS&P) w.e.f. 01.10.2009 and of
the post of Director (Finance) w.e.f. 10.06.2010 till the appointment of
regular incumbents.
Shri B. Prasada Rao also held the additional charge of the post of Director
(E.R&D), BHEL for the period 01.10.2009 to 23.12.2009.
Shri Atul Saraya, has been appointed as Additional Director to take charge
of the office of Director (Power), BHEL w.e.f. 01.10.2009.
Shri V.K. Jairath has been appointed as Part-time Non-Official Director
w.e.f. 12.11.2009.
Shri Shekhar Datta has been appointed as Part-time Non-Official Director
w.e.f. 27.11.2009.
Shri O.P. Bhutani has been appointed as Additional Director to take charge
of the office of Director (E.R&D) w.e.f. 24.12.2009.
In accordance with Section 260 of the Companies Act, 1956 and Article
67(iv) of the Articles of Association of the Company, S/Shri Atul Saraya,
V.K. Jairath and O.P. Bhutani shall hold their directorships upto the 46th
Annual General Meeting of the Company and are eligible for appointment as
Directors at the Meeting.
Cessation:
Shri K. Ravi Kumar was appointed as Director (Power) w.e.f. 16.05.2005 and
was holding additional charge of the post of Chairman & Managing Director
from 01.03.2008. On completion of his tenure, he laid down the office of
Director (Power) and Chairman & Managing Director on 30.09.2009.
Shri C.S. Verma, Director (Finance), consequent upon his appointment as
Chairman, SAIL, has relinquished the charge of the post of Director
(Finance) and was relieved from the services of BHEL on 10.06.2010. Shri
Shekhar Datta, who was appointed as Part-time Non-Official Director on
27.11.2009, has since resigned and ceased to be a Director of the company
w.e.f. 23.04.2010.
The Board of Directors place on record their deep appreciation of the
valuable services rendered as well as advice and guidance provided by Shri
K. Ravi Kumar, Shri C.S. Verma and Shri Shekhar Datta 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 S.
Ravi, A.K. Basu and M.A. Pathan 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 -2 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. Important activities undertaken during
the year are as under:-
* Hindi workshops and Hindi computer training programme in prescribed
numbers were organised in all the Units/Divisions including Corporate
Office.
* All the Units/Divisions of the company, including Corporate Office,
celebrated Hindi Divas on 14/9/2009 and organised various Hindi
competitions during the celebration of Hindi Week/ Fortnight/ Month in the
month of September, 2009.
* 04 employees of the Company were given cash award for writing books in
Hindi under Hindi Pustak Lekhan Puraskar Yojana.
* A five day Refresher Course was organised in the month of October,2009
for Rajbhasha Officers and Translators working in the Company.
* All BHEL Hindi Coordinators Meet was held in the month of January, 2010
in Udaipur,Rajasthan to discuss the various issues relating to the official
language implementation.
* With a view to create interest towards Hindi among the employees,all the
Units/Divisions including Corporate Office spent the required amount on
purchase of Hindi books during the year.
* All the major Units and some of the Divisions of the Company published
annual Hindi magazine and Corporate Office brought out 04 issues of its
quarterly Hindi Magazine 'Arunima' during the year.
* Committee of Parliament on Official Language inspected our Varanasi,
Tiruchy, EPD Units during the year and appreciated the efforts being made
in implementing Official Language Policy of the Govt, and took some
assurances from us to enhance the use of Hindi in official work.
* Power Sector-ER bagged Third Prize from the Department of Official
Language,Ministry of Home Affairs, Govt, of India for excellent performance
in the area of Official Language Implementation among the PSUs located in
Kolkata.
* Many awards were received by the employees of major Units including
Corporate Office in various Hindi Competitions organised under the auspices
of Town Official Language Implementation Committee.
* 12 BHEL Units/Divisions were inspected by Corporate Rajbhasha
Implementation Group.
* All the 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 located in Region A.
PARTICIPATION IN THE GLOBAL COMPACT OF THE UNITED NATIONS:
BHEL reiterates its commitment to United Nations Global Compact (UNGC)
Programme and set of core values enshrined in its ten principles on human
rights, labour standards, environment and anti corruption.
Company intents to advance GLOBAL COMPACT (G.C.) Principles as a
responsible corporate citizen. BHEL has taken a lead role in promoting G.C
principles in other Indian organizations 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. Notable activities of
the year were organizing National Convention, Asia Pacific Regional
Conclave 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.
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.
VIGILANCE:
The vigilance organisation of BHEL is headed by the CVO. Each Unit / Region
of BHEL has a vigilance set up headed by a senior vigilance executive
reporting to the CVO.
As in earlier years, preventive vigilance was one of the thrust areas of
BHEL Vigilance during 2009-10. Inadequate awareness or wrong interpretation
of the Company's policies, rules and procedures often leads to lapses /
irregularities. This awareness amongst employees of the organization is
generated by organizing training programmes. 76 such programmes were
organized during the year 2009-10 in various Units, Regions and offices of
BHEL.
During the year 2009-10 Vigilance Heads of all Units / Regions have carried
out system studies with a view to make systems more effective and
transparent. Some of the major areas where suggestions/recommendations were
made to the Management are as under:
* Preparation of estimates for Civil and Structural Works with special
focus on Bill of Quantity (BOQ) descriptions, preparation and basis of
estimates
* Vendor Registration procedure (SEARP, 2010)
* Purchase Policy
* Uniform Loading/evaluation criteria in tenders
* Parking of BHEL PF funds with the Arrangers
* Guidelines for dealings with Indian Agents of Foreign Principals
Transparency in various areas of Company operations, especially those
requiring interface with customers and suppliers helps instill confidence
in the stakeholders and achieve vigilance objectives. Some of these
successfully implemented measures include:
* Tender notifications are uploaded on web.
* Purchase Orders, Works Contracts, procedure and forms related to Vendor
registration are also being hosted on the web site.
* E-payment of vendor bills is being implemented throughout the
organization and principle of first come first served is being followed as
a rule in payment of vendor bills.
SECURITY:
The company's security mechanism is sufficient and gear 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 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. Deptt. 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.
The Management, security staff and the employees of company are sensitized
to the security needs of company.
SUSTAINABILITY:
Sustainability is an integral part of company's strategy. BHEL is committed
to be an Environment friendly company in all its areas of activities,
products and services, providing safe and healthy working environment. In
fact, this aspect has become an integral part of the company's business
performance. Significantly, BHEL has also taken initiatives on Clean
Development Mechanism (CDM) projects to reduce green house gas emissions in
a more focused way and vigorous efforts are being made to achieve
milestones in this area.
In line with the company's strategy, BHEL undertakes a lot of Environment
Improvement projects and Community Development Programmes. 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.
BHEL scheme on Corporate Social Responsibility has evolved over the years
and has been endorsed by the top management as a policy statement, on the
underlying principal that BHEL is a Committed
Corporate Citizen and its Corporate Social Responsibility is not only to
build synergy between business and Corporate Social Responsibility but is
an integral part of business strategy.
A journal is also published for wider circulation on Health, Safety and
Environment.
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, 2010 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 2009-10 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, 2010 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-3:
(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-4.
The detail of the employees who are drawing remuneration in excess of the
limits prescribed under section 217(2A) of the Companies Act, 1956 read
with Companies (Particulars of employees) Rules, 1975 is given at Annexure-
5.
Statement pursuant to Section 212 of the Companies Act, 1956 relating to
Subsidiary Company is given at Annexure-6.
AUDITORS:
The Auditors of your Company are appointed by the Comptroller and Auditor
General of India. The names of auditors appointed for the year 2009-10 are
printed separately in the Annual Report.
We are glad to inform that there is no qualification in the Auditors'
Report and there is no comment of Comptroller and Auditor General of India
on the Annual Accounts of the Company for the year 2009-10. The reports are
given at Annexure-7.
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 organisation and looks 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 of the continued co-operation
received from all the Technology Collaborators and Suppliers and support
provided by the Financial Institutions and bankers. The Board wishes to
record its deep gratitude to all members of the BHEL family whose
enthusiasm, dedication and co-operation has made the continued achievement
of an excellent performance possible.
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 23, 2010
MANAGEMENT DISCUSSION AND ANALYSIS
A. FINANCIAL OPERATIONS:
Analysis of the financial performance of the Company (I) STANDALONE
FINANCIAL RESULTS BALANCE SHEET
1. SHARE CAPITAL: Figures in Rs. Crore
F.Y. F.Y.
2009-10 2008-09
Authorised Share capital 2000 2000
Issued, subscribed &
Paid up Share Capital 490 490
There is no change in the share capital during
the year 2009-10.
2. RESERVES & SURPLUS
Capital Reserve 3 3
Foreign Project Reserve - 1
General Reserve 14850 11850
Profit & Loss Account 575 595
15428 12449
The Reserve & Surplus has increased by Rs.2979 crore
during 2009-10 after addition of profit after
dividend distribution.
3. LOANS FUNDS
Secured Loans
Unsecured Loans 128 149
Unsecured Loan represents credit
for assets taken on Finance Lease.
4. FIXED ASSETS
Gross Block 6580 5224
Less: Depreciation/amortisation 4151 3713
Less: Lease Adjustment Account 14 41
Net Block 2415 1470
Capital Work-in-Progress 1530 1157
Gross Block and Capital Work in progress
increased by Rs.1356 crore and Rs.373 crore
respectively during the year due to Capital
expenditure incurred on ongoing capacity
augmentation programme at various
manufacturing units and the erection and
commissioning facilities at project sites.
5. INVESTMENTS
Long Term Trade Investments 80 52
Long-term trade investments have
increased by Rs.28 crore mainly on
account of Equity participation in
Joint Venture Companies.
6. DEFERRED TAX ASSETS (NET):
Deferred Tax Assets (Net) 1527 1840
Deferred Tax assets (Net) have decreased by
Rs.313 crore, mainly due to changes in
temporary disallowance as per Income Tax Act
as on 31.03.10.
7. INVENTORIES
Inventories 9235 7837
Inventory increased by Rs.1398 crore over previous
year in tune with the increase in volume of
operations but in terms of days of turnover, it
has decreased from 102 days in 2008-09 to 99 days
in 2009-10.
8. SUNDRY DEBTORS
Sundry Debtors (Net) 20689 15976
Debtors in absolute terms increased by Rs.4713 crore
mainly due to increase in turnover. In terms of days
of turnover it increased from 208 days in 2008-09 to
221 days in 2009-10. The increase in debtors is due
to delay in funding arrangement/ fund allocation by
the customer, increase in deferred debts etc.
9. CASH AND BANK BALANCES
Cash & Bank Balances 9790 10315
The cash and cash equivalents have decreased from
Rs.10315 crore in 2008-09 to Rs. 9790 crore in
200910, mainly due to payment of wage revision
arrears.
10. LOANS AND ADVANCES & OTHER CURRENT ASSETS
Loans & advances 2814 2424
Other Current assets 407 350
Loans & advances have increased by Rs 390 crore in
line with increased level of operations. Other current
assets represent interest accrued on bank deposits and
investments.
11. CURRENT LIABILITIES & PROVISIONS
Current Liabilities 28024 23357
Provisions 4418 4976
32442 28333
The increase in current liabilities is mainly due to
increase in advances from customers by Rs. 2755 crore
and in sundry creditors & other liabilities by Rs.1828
crore due to increase in volume of operations. The
decrease in provision is on account of settlement of
wage revision during the year and consequent withdrawal
of provision created for wage revision.
PROFIT & LOSS ACCOUNT
12. TURNOVER
Gross Turnover 34154 28033
Less: Excise Duty & Service Tax 1292 1821
32862 26212
Turnover net of Excise Duty increased by 25.37% during
the year, Power segment and industry segment
contributed 77% and 23% respectively for the total
revenue of the company.
13. OTHER INCOME
Other operational Income 493 514
Other income 347 213
Interest Income 808 770
1648 1497
Increase in other income is mainly on account of
Exchange variation gain.
14. CONSUMPTION OF MATERIAL, ERECTION &
ENGINEERING EXPENSES
Consumption of Material, Erection 20672 17620
& Engineering Expenses
The increase in Consumption of Material, Erection
& Engineering Expenses by Rs.3052 crore or 17.32%
was mainly on account of increase in Turnover/
volume of operations, which was increased by 21.83%.
As percentage of Net Turnover it decreased from
67.22% in 2008-09 to 62.91% in 2009-10.
15. EMPLOYEES REMUNERATION & BENEFITS
Employees Remuneration & Benefits 6449 2984
Less : Provision Withdrawn 1749 -
Net Employees Remuneration 4700 2984
and Benefits
Consequent to wage revision settlement the arrears
have been booked to natural heads with corresponding
withdrawal of provision for wage revision. (Refer
Note No. 26-B of Schedule-19)
16. OTHER EXPENSES OF MANUFACTURING, ADMINISTRATION,
SELLING & DISTRIBUTION
Other Expenses of Manufacturing, 2155 1836
Administration, Selling & Distribution
The increase in other Expenses of manufacturing,
Administration, Selling & Distribution is Rs.319 crore
or 17.37% as compared to 2008-09 in line with the
increased level of operations of the company.
17. PROVISIONS
Provisions (Net) -934 1281
Decrease in Provisions (Net) is on account of
withdrawal of provision for wage revision as
wage revision due from 01.01.2007 was settled
in 2009-10 and provision created in the earlier
years has been withdrawn during 2009-10.
18. INTEREST AND OTHER BORROWING COSTS
Interest and other borrowing costs 34 31
The interest cost represents the interest component
of the lease rentals on assets taken on Finance lease.
19. DEPRECIATION
Depreciation 458 334
The increase in depreciation by Rs. 124 crore was on
account of increase in gross block on commissioning
of assets, as part of ongoing capacity augmentation
schemes.
20. PROVISION FOR TAXATION
Income Tax-Current Year 2006 2250
- Earlier Years (-) 34 (-) 78
Deferred tax 313 (-) 502
Fringe Benefit Tax-Current Year - 40
- Earlier Years (-) 5 1
2280 1711
The increase in provision for taxation is in line
with the growth in profit for the year.
21. PROFIT AFTERTAX
Profit after Tax 4311 3138
The Net profit for the year rose by
Rs.1173 crore or 37.38%.
22. DIVIDEND:
The company has paid an interim dividend of 110% (Rs. 11 per share), Rs.538
crore, on share capital of Rs. 490 crore during the year 2009-10. The Board
has also recommended a Final dividend of 123% (Rs.12.30 per share) i.e. Rs.
602 crore.
The total dividend payment for the year 2009-10 is Rs. 1141 crore
(exclusive of dividend tax) as against Rs. 832 crore in the previous year.
Provision of Rs. 100 crore has been made for corporate dividend tax on the
Final dividend proposed. Corporate dividend tax of Rs. 91 crore has already
been paid on the interim dividend.
23. TRANSFER TO GENERAL RESERVE:
Rs. 3000 crore has been transferred to General Reserve for the year 2009-10
as against Rs. 2000 crore in the previous year.
(II) FINANCIAL REVIEW OF SUBSIDIARY COMPANY
Bharat Heavy Plate and Vessels Ltd. (BHPV) is 100% Subsidiary Co. of BHEL
taken over on 10.05.2008. BHEL is in the process of reviving the Company
with adequate managerial and financial support.
The financial highlights of BHPV are as under:
Figures in Rs. Crore
F.Y. F.Y.
Particulars 2009-10 2008-09
BHEL's Investment in Equity at Re.1/- at Re. 1/-
Advance against issue of shares 34.00 34.00
Turnover 104.31 84.39
Profit after Tax (-) 8.60 96.35 #
Net Worth (-) 238.54 (-) 229.95
# includes Rs. 230.08 crore interest waived on loans.
(Ill) 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:
Figures in Rs. Crore
F.Y. F.Y.
Particulars 2009-10 2008-09
BHEL's Investment in Equity 2.38 2.38
Turnover 434.54 427.29
Profit after tax 50.42 44.31
Net Worth 70.58 55.76
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:
Figures in Rs. Crore
F.Y. F.Y.
Particulars 2009-10 2008-09
BHEL's Investment in Equity 25.00 0.05
Turnover 2.30 -
Profit after tax (-) 0.76 (-) 2.35
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. The Corporation is in the process of setting up a
Thermal Power Plant of Capacity 2x800 MW at Udangudi, Tuticorin Dist. in
Tamil Nadu. The Company has obtained the required land and the development
of the same is on.
Figures in Rs. Crore
F.Y. F.Y.
Particulars 2009-10 2008-09
BHEL's Investment in Equity 5.00 5.00
Net Block 0.37 -
Capital Work in Progress 4.55 0.39
d) BARAK POWER PVT. LTD.:
A Joint Venture between BHEL & PTC, incorporated on 1st Sept, 2008. BHEL
has Contributed Rs. 5 lakh towards Equity participation. There were no
major financial activities during the year.
e) POWER PLANT PERFORMANCE IMPROVEMENT LTD.:
A Joint Venture between BHEL and Siemens is under liquidation.
f) 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 April 15, 2009 under the name of
'Raichur Power Corporation Ltd'. BHEL has Contributed Rs. 5 Crore towards
Equity participation. There were no major financial activities during the
year. The Joint Venture is in the process of setting up power plant.
g) 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 February 25, 2010 under the
name of 'Dada Dhuniwale Khandwa Power Ltd'. BHEL has invested Rs.2.50 Crore
as advance deposit towards issue of shares. There were no major financial
activities during the year.
(IV) CONSOLIDATED FINANCIAL STATEMENTS (CFS):
Consolidated Financial Statements have been prepared in accordance with
Accounting Standard (AS-21) -'Consolidated Financial Statements' and
Accounting Standard (AS-27) -' Financial Reporting of Interest in Joint
Ventures.'
A brief summary of the results on Financial performance after elimination
of Intra group transactions in line with the above (AS) are as under:
2009-10
BHEL
Subsidiary share in Total
BHEL Co. JVs (CFS)
Profit & Loss A/c
Turnover 34154 82 218 34454
Profit Before Tax 6591 -8 38 6621
Profit After Tax 4311 -9 25 4327
2008-09
BHEL
Subsidiary share in Total
BHEL Co. JVs (CFS)
Profit & Loss A/c
Turnover 28033 72 214 28319
Profit Before Tax 4849 -44 33 4838
Profit After Tax 3138 -44 21 3115
B. PERFORMANCE OF BUSINESS SEGMENTS POWER SECTOR:
Power Sector booked orders worth Rs. 41,982 crore for supply and
installation of 16,489 MW of Main Equipment (15,080 MW of generating
equipment and 1408.5 MW of Pump and Motor Sets) as well as services and
supply of spares.
Major achievements during the year:
* Private Sector Customers reposed their confidence in BHEL and placed
highest ever orders aggregating to 14,689 MW of Main Equipment (89% of
total ordering) during a year.
* First Super-critical order from private sector for Bara (3x660 MW) from
Prayagraj Power Generation Company Limited (Jaypee Group).
* All time high order booking achieved during a year for Hydro sets
(including Pump and Motor) - 1,739 MW.
* Order received for 10 Sets of 270 MW from Single Customer, Elena Power
and Infrastructure Ltd. (EPIL - India Bulls Group) for Nasik (5x270 MW) and
Amravati (5x270 MW) Projects.
* Repeat Order from NPCIL for RAPP (1x700 MW) -Steam Generator.
* Successfully marketed recently introduced new rating sets. Orders booked
in 2009-10:
* 270 MW - 18 Sets (22 sets till date)
* 525 MW - 4 Sets (6 sets till date)
* 600 MW - 6 sets (15 sets till date)
- New Customers added:
* Korba West Power Co Ltd.
* Ideal Energy Power Ltd.
* Jindal India Thermal Power Ltd.
* Abhijeet Infra Ltd. (Abhijeet Group)
* Adhunik Power and Natural Resource Ltd.
* Hindustan Construction Co.
* Monnet Power Co. Ltd.
* Megha Engineering & Infrastructures Ltd.
* Pipavav Energy Pvt Ltd.(Videocon Group)
* Elena Power India Ltd. (Indiabulls Group)
* Prayagraj Power Generation Company Limited (Jaypee Group)
* Jhabua Power Ltd.
* Surana Power Ltd.
* Durgapur Projects Ltd.
* Hinduja National Power Corporation Limited
Strategic initiatives taken during the year includes:
* MoU signed with Mahagenco for setting up of 1500 - 1600 MW capacity plant
in Latur.
* JV company incorporated with MPPGCL for setting up 2X800 MW Super Thermal
Power Plant at Khandwa.
Following major orders were received during the year: COAL (14590 MW)
Orders received against stiff International Competitive Bidding (ICB):
* 2x525 MW Malibrahmani, Angul from Monnet Power Co. Ltd. (MPCL)
* 2x600 MW Derang, Angul from Jindal India Thermal Power Ltd. (JITPL)
* 1x500MWVallur#3-Ph. II from NTPC Tamil Nadu Energy Company Limited
(NTECL) - JV company of NTPC & TNEB. Two units for 500 MW of Ph. I are
already under execution by BHEL.
* 2X600 MW Pipavav TPP from Pipavav Energy Pvt Ltd (PEPL - Videocon Group)
* 4x270 MW Matrishri Usha Jayaswal MPP (Ph.I and Ph. II) at Chitrapur from
Abhijit Infra Ltd. (AINL -Abhijit Group)
* 2x250 MW Bhavnagar TPP from Bhavnagar Energy Company Ltd. (BECL)
* 1x600 MW Seoni #1 from Jhabua Power Ltd. (JPL)
* 2x210 MW Raichur TPS from Surana Power Ltd.
* 2x520 MW Vizag from Hinduja National Power Corporation Limited (HNPCL)
Orders received on Negotiated basis:
* 1 x600 MW Avantha Bhandar TPP from Korba West Power Co. Ltd. (KWPCL)
* 2X270 MW Bela TPP #1&2 from Ideal Energy Projects Ltd. (IEPL)
* 2X270 MW Adhunik Power #1&2 from Adhunik Power and Natural Resources
(APNRL)
* 3x660 MW Bara # 1,2&3 with Supercritical Parameters from Prayagraj Power
Generation Company Ltd. (PGCL - Jaypee Group). First Supercritical Order
from Private sector.
* 5X270 MW Nasik & 5x270 MW Amravati from Elena Power and Infrastructure
Ltd. (EPIL - India Bulls Group). Order for 10 sets of 270 MW from single
customer.
* 2x195 MW Muzaffarpur TPP Stg II from Kanti Bijli Utpadan Ltd. (JV of
NTPC-BSEB)
* 1 x250 MW Durgapur #8 from Durgapur Projects Ltd. (DPL)
GAS (160 MW):
* 160 MW Ramgarh Stage III CCPP from Rajasthan Rajya Vidyut Utpadan Nigam
Limited (RRVUNL) received on Negotiation basis.
NUCLEAR:
* Steam Generators for 1x700 MW RAPP from Nuclear Power Corporation of
India Limited (NPCIL) received through Limited tender.
HYDRO (1739 MW including 1409 MW Pump-Motor sets):
Orders received against stiff International Competitive Bidding (ICB):-
* 3x110 MW Kishanganga HEP from Hindustan Construction Company (HCC)
Orders received through Limited Tender:
* 5x121.5 MW Pranhita LIS Pkg. 8 from Megha E&IL
* 3x99 MW Pranhita LIS Pkg. 10 from Megha E&IL
* 4x96 MW Pranhita LIS Pkg. 11 from Megha E&IL Orders received on
Negotiated basis :
* 2x60 MW Pranhita LIS Pkg. 23 from Patel Engineering Ltd. (PEL)
SERVICE AFTER SALES (SAS):
Orders worth Rs. 1632 crore for spares, Rs. 233 crore for services and Rs.
6 crore for supply of R& M Equipment were received.
COMMISSIONING:
BHEL commissioned 44 sets totaling 5578 MW during the year within the
country and abroad. Power sector commissioned 30 sets totaling 5152 MW
during the year within the country and abroad. This includes 20 BHEL
utility sets totaling 4725 MW and 10 Industrial sets of 427 MW.
Additionally BHEL MUs commissioned 2 utility sets of 84 MW(overseas) and 12
industrial sets of 342 MW in the country.
Thermal utility sets commissioned during the year were Vijaywada-7 (500 MW)
in Andhra Pradesh, Kahalgaon-7 (500 MW) in Bihar, Bhilai 2 (250 MW) in
Chhattisgarh, Kutch Lignite 4 (75 MW) in Gujarat, Chandrapura 7&8 (2x250
MW) in Jharkhand, Paras-2 (250 MW) & New Parli -2 (250 MW) in Maharashtra,
Chhabra-1 (250 MW), Giral-2 (125 MW), Kota-7 (195 MW) &
Suratgarh 6 (250 MW) in Rajasthan, Dadri-5 (490 MW) in Uttar Pradesh,
Bakreswar-5 (210 MW) and Budge Budge-3 (250 MW) in W. Bengal.
BHEL commissioned highest number of Overseas Gas sets during the year.
These were: Siddhirganj (126 MW), Sulaymaniah 1,2,3&4 (4x126 MW) and Al
Ghail 1&2 (2x42 MW).
In addition to above BHEL commissioned two non-BHEL Nuclear sets of RAPP
5&6 (2x220 MW).
PERFORMANCE OF BHEL UTILITY SETS:
BHEL coal based sets registered PLF of 78.4 % which is 0.87% higher than
National Average of 77.53%.
* During the year, generation from BHEL supplied 195/200/210/250/500 MW
coal based sets which form the backbone of country's power generation went
to 395018 MUswith PLF of 82.1% and OA of 90.1%. 74.0% of total electric
energy generated by Coal sets in the country was contributed by these sets.
* Seventeen stations equipped with BHEL equipments recorded a PLF of above
90% Viz. Dahanu (102.2), Dadri (99.3), Korba-STPS(97.7),Unchahar (97.5),
Simhadari (97.3), Vindhyachal (96.7), Sabarmati (95.9),
Ramagundam (93.9), Sipat (93.3), Raigarh JSPL (93.1), Bhatinda (LM) (93.0),
CESC (92.9), Singrauli (92.9), Tanda (92.0), Talcher (91.2), Ropar (91.1),
Rihand (91.0)
* 191 BHEL supplied coal based sets achieved PLF of over 70%. Of these, 72
sets registered PLF of over 90% and 71 sets achieved PLF between 80% - 90%.
* BHEL Coal Sets registered the Operating Availability (O.A.) of 87.0%
* 136 Thermal Sets of BHEL make achieved O.A. higher than or equal to 90%.
* 171 BHEL supplied coal based sets clocked uninterrupted operation for
more than 90 days during the year out of which:
* 67 sets ran twice continuously for more than 90 days.
* 29 sets continuously ran for more than 200 days.
BHEL continued its endeavour 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 96 thermal
sets.
INDUSTRY SECTOR:
In Industry Sector, BHEL secured record orders worth Rs. 14366 crore in
Captive Power, Rail Transportation, Power Transmission, Oil & Gas and other
industrial segments. The year witnessed a growth of 40% over previous year
with a number of first-time-ever achievements.
Major orders received during the year / other business highlights- Industry
segment-wise include:
Captive Power plants:-
* Highest value order ever received in Industry Sector for a combined cycle
Co-generation plant for IOCL refinery at Paradip , Orissa on LSTK basis.
* Major repeat orders : HINDALCO - 6 x 150 MW BTG (Boiler-Turbine-
Generator) package for Sambalpur, Orissa project and CPCL - 20 MW
Cogeneration plant for Chennai Refinery.
* Largest size BFBC boiler order (2 x 180 TPH) from JSPL for Angul, Orissa
project.
* Major order for 2 x 80 MW BTG (Boiler-Turbine Generator) package from
Sterlite Industries for Tuticorin, Tamilnadu project.
* Order for 53 MW CCPP from BCPL for Lepetkata, Assam on LSTK basis.
* Variety of STG (Steam-Turbine-Generator) orders viz. 80 MW - Monnet Ispat
& Energy Ltd, Chattisgarh, 2 x 50 MW - FACOR power, Orissa, 2 x 60 MW - Jai
Prakash Associates, Cement plant, Sidhi, Madhya Pradesh, 2 x 43 MW - Action
Ispat and Power Ltd, Orissa, 1 x 24 MW - Shri Shyam Ispat (India) Pvt. Ltd.
Rail Transportation:
* Highest value order ever received in Transportation sector for 150 nos.
Electric locomotives (25 kV AC, Type WAG 7) from Indian Railways.
* A number of orders for Electrics and Traction motors from Indian Railways
besides Diesel Shunting Locomotive (2 nos. 1400 HP) order from UPRUVNL for
Parichha TPP, UP.
Other business highlights in this segment include:-
* Signing of an MOU with M/s Alstom for participating in tender for setting
up of factory for Electric Loco component at Dankuni.
* Signing of an MOU with M/s. GE for participating in tender for setting up
of Diesel loco factory at Marhowra.
* Development of IGBT based 3 phase AC propulsion system for AC EMU.
Industrial Products (Electrical):
* Highest ever orders for HT Motors from other manufacturers of Pumps and
Compressors besides those for power plant applications.
Industrial Products (Mechanical):
* Orders for wide variety of Gas compressors from, various refineries viz.
MRPL, HPCL, BCPL and IOCL.
* A prestigious order for GT driven Rich Gas Compressor from BCPL.
Defence Business:
* Developmental order for 200 kW High Temperature Superconducting Motor
from NSTL, Vizag for Naval application. It is being developed for first
time in the country.
* First order for supply of Permanent Magnet based 50 KW, 400 Hz frequency
converter for Naval application. This technology is being developed only by
BHEL in the country.
Other business highlights in this segment include:-
* BHEL has been nominated as Nodal agency for serial production of Marine
Gas Turbine- named Sagar Shakti Engine for propulsion of Indian Naval
Ships, with rated power of 12 MW.
Transmission Systems - Substation/Switchyards:
* Order for two large value 400/220 kV Substation Packages for Koradi-ll
and Chandrapura-ll from MSETCL against stiff competition from major players
in the market.
* First order for Phase Shifting Transformer from APGENCO to be installed
at their Kothagudam TPS which shall enable diversion of power flow from 220
kV lines to 400 kV lines.
Other business highlights in this segment include:-
* Signing of an MoU with Toshiba Corporation, Japan to establish a Joint
Venture Company (JVC) to address Transmission and Distribution (T&D)
business in India and other mutually agreed countries.
* 80 MVAR Controlled Shunt Reactor, based on technology developed in-house,
has been commissioned by BHEL on 400kV Karad-Lonikhand Line of MSETCL. This
is the first commercial project of its kind in the country.
Transmission Products:
* Order for 13 transformers totaling to 2355 MVA from NTPC for Bongaigaon
Project. This was the largest order for transformers decided by NTPC during
the year for any project.
* Three consecutive orders for 500 MVA, 400 kV Auto transformers from
Powergrid (total eight transformers). It is the largest rating in the
country for 3 phase 400 kV transformers.
* Prestigious order for 420 kN Antifog disc insulators from Powergrid for
+800 kV HVDC transmission line against international competitive bidding.
This is the first ever order in the country for 420 kN rating and also for
1800 kV HVDC application. BHEL is the only manufacturer in the country
having capability to manufacture these insulators.
Other business highlights in this segment include:-
* BHEL has successfully tested 125 MVAR, 400 kV shunt reactor- the only
supplier to have manufactured, tested and supplied 125 MVAR, 400 kV reactor
in the country.
New & Renewable Energy:
* Two SPV Power Plants of 2 MW and 1 MW for KPCL at Raichur- first-ever
order bagged by BHEL for megawatt size grid connected SPV power plant.
INTERNATIONAL BUSINESS:
In International Business, despite the continuing global recessionary trend
and the world energy market still undergoing negative growth, BHEL has
achieved a physical export order inflow of Rs. 3571 crore during the year -
an increase of 9.4% over that of previous year.
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 and product areas.
During the year, a number of prestigious overseas orders were executed,
further expanding BHEL's overseas references.
Major Achievements during 2009-10:
Significant export orders received include:
* An order for 1200MW (6x200MW) Punatsangchhu-I Hydro electric power plant
from Punatsangchhu Hydroelectric Project Authority, Bhutan. This is the
largest order in the Hydro Power Business segment six years with a
provision of extension by another three years. With these orders, BHEL will
have the unique distinction of having 16 Gas Turbine sets contracted in
Oman alone.
Entry into new countries:
* Belarus: First ever order secured from Belarus for 126MW (Fr 9E Gas
turbine based) Grodno II Co-generation project in Belarus. This is also the
first ever overseas order for supply of HRSG as well as Gas Turbine for Co-
generation application.
* Democratic Republic of Congo: First order from DR Congo for 64MW Katende
(Kananga) Hydro Power plant project.
* Secured first-ever export order for 400kV class Shunt Reactors (3 nos.
30MVAR & 1 no. 50MVAR reactors) from Public Power Corporation, Greece. This
is the 21 st consecutive order since 1995 from Greece for transmission
equipment totaling over 3000MVA.
The overseas orders executed include:
* Commissioning of 8 sets totaling to 729 MW in four countries overseas -
highest-ever in a single year.
* Siddhirganj Peaking Power Plant, Bangladesh: First unit of 2x126 MW
(Fr9E) Gas turbine based power plant was inaugurated by the Honorable Prime
Minister of Bangladesh. BHEL has also for the first time supplied,
installed and commissioned 3 nos. fuel gas booster compressors of BHEL make
with associated gas conditioning skids in this project.
* Sulaymaniah Gas based power project, Iraq: -4 units of 126MW (Fr9E) Gas
turbine generator sets were successfully commissioned.
* First-ever power plant by BHEL in UAE: 2x42MW (Fr6B) Gas turbine
generator sets for Al Ghail Power Plant, Ras Al Khiama Investment Authority
(RAKIA) were successfully commissioned.
* First environment friendly Circulating Fluidized Bed (CFBC) Boiler
commissioned overseas: 15MWCoal fired Captive power plant with 120TPH CFBC
Boiler for PTIBR, Indonesia.
* First-ever Compressor commissioned in Europe: Making an entry into
European market, BHEL supplied and commissioned a C02 Compressor for GPN
France.
* Demonstrating the highest level of customer commitment, to overcome the
challenges of difficult working conditions of Afghanistan, BHEL
successfully commissioned the 230kV Kabul Substation.
* 132kV Cotobie Substation in Ethiopia was also charged during the year
under prestigious World Bank project for Rural Electrification of Ethiopia.
* Adding on, BHEL also commissioned the 230 kV Baghabari substation in
Bangladesh funded by Asian Development Bank.
* 24 Wellheads supplied to Daleel Petroleum, Oman during the year under
Rate Contract entered in May 2006 with Daleel Petroleum, Oman. So far, 120
Wellheads have been supplied to Oman under this rate contract.
Capital Investment
C. CAPITAL INVESTMENT
* Capital Investment during the year 2009-2010:
BHEL has incurred a capital expenditure of Rs.1713 crore during the year
2009-10 towards augmentation of manufacturing capacity and modernisation of
the facilities, in manufacturing units and at power project sites, as
against Rs. 1082 crores invested during 2008-09, registering an increase in
capital investment by 58%.
* Rebuilding of Ageing Facilities:
Focused attention was given on rebuilding and retrofitting of existing
facilities to enhance their life, accuracy and productivity through an
additional investment of Rs. 51 Crore.
D. JOINT VENTURES
i) BHEL GE Gas Turbine Services Pvt. 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 twelve full financial years of operation.
BGGTS achieved a sales turnover of Rs. 434 crore during the year 2009-10
with a profit after tax of Rs. 50 crore. Orders for Rs. 386 crore were
booked by BGGTS during the year including export orders from overseas.
BGGTS
ii) Powerplant Performance Improvement Ltd. (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, both the promoter
partners have mutually agreed to gradually wind up the company.
iii) NTPC - BHEL Power Projects Ltd (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. The JV Company was incorporated on 28th April, 2008
with initial authorized and paid-up capital of Rs 10 lakhs subscribed to
equally by NTPC and BHEL. Further, Board has also decided to enhance BHEL's
contribution from Rs. 5 lakh to Rs. 100 crore which will be done in
tranches depending upon the requirements. The paid up capital is Rs. 50
crore with BHEL and NTPC each subscribing Rs. 25 crore.
iv) Barak Power Private Limited:
BHEL has promoted a joint venture company with PTC India Ltd for setting up
of 2x125 MW CFBC based power plant in Silchar, Assam. The JVC was
incorporated on 1st September, 2008 under the name of Barak Power Private
Ltd. with an authorized and paid up capital of Rs 10 lakh subscribed to
equally by BHEL and PTC. Further, the promoters have also agreed to enhance
their contribution from Rs. 5 lakh to Rs 100 lakh each. At present the paid
up equity capital is Rs 10 lakh, with BHEL and PTC India Ltd each
subscribing Rs. 5 lakh.
v) Udangudi Power Corporation Limited:
BHEL has promoted a joint venture company with Tamilnadu Electricity Board
for setting up of a 2x800 MW Supercritical Thermal Power Plant at Udangudi,
Tuticorin, Tamilnadu on build, own and operate basis. The JVC was
incorporated on December 26, 2008 under the name of 'Udangudi Power
Corporation Ltd'. The initial authorized and paid up equity of the JVC is
Rs 10 crore subscribed to equally by TNEB and BHEL. The equity structure
would be diluted subsequently to bring in Financial Institution/Banks etc,
so that TNEB & BHEL hold 26% equity each. The state Govt has allotted land
to the JVC for the project. The JVC is also in the process of obtaining
coal linkage, MOEF clearance and finalizing main plant equipment order on
BHEL.
vi) Raichur Power Corporation Limited:
BHEL has promoted a joint venture company with Karnataka Power Corporation
Limited (KPCL) for setting up of a 2x800 MW Supercritical Thermal Power
Plant at Yeramarus, Raichur, Karnataka and 1x800 MW Supercritical Thermal
Power Plant at Edlapur, Raichur, Karnataka on build, own and operate basis.
The Joint Venture Agreement with KPCL was signed on January 12, 2009 and
the JVC was incorporated on April 15, 2009 under the name of 'Raichur Power
Corporation Ltd'. The initial authorized and paid up equity of the JVC is
Rs 10 crore subscribed to equally by KPCL and BHEL. The equity structure
would be diluted subsequently to bring in Financial Institution/Banks etc,
so that KPCL & BHEL hold 26% equity each. The JVC has received MOEF
clearance for the 2x800 MW Yeramarus power project and the order for supply
and E&C of main plant equipment for the 2x800 MW Yermarus project has been
placed on BHEL for a value of Rs. 6300 crore. The order for 1 x800 MW
Edlapur project is under finalisation.
vii) 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 2x800 MW Supercritical
Thermal Power Plant at Khandwa, Madhya Pradesh on build, own
and operate basis. The Joint Venture Agreement with MPPGCL was signed on
January 28, 2010 and the JVC was incorporated on February 25, 2010 under
the name of 'Dada Dhuniwale Khandwa Power Ltd'. The initial authorized and
paid up equity of the JVC is Rs 5 crore subscribed to equally by MPPGCL and
BHEL. The equity structure would be diluted subsequently to bring in
Financial Institution/Banks etc. so that MPPGCL & BHEL hold 26% equity
each.
E. R&D AND TECHNOLOGICAL ACHIEVEMENTS
BHEL's products and systems are highly technology intensive in nature and
R&D and technology development are of strategic importance to the company.
The progress is being tracked broadly on three parameters namely;
expenditure on R&D efforts resulting into either new products, improved
variants of existing products, establishment of New Technologies/ Processes
or establishment of state-of-art facilities, contribution to turnover
achieved by products and systems developed in-house and the enhancement of
intellectual capital which are in productive use in the company's business
(increase in number of patents and copyrights filed).
All of these three parameters have shown considerable growth when compared
to last year. The actual R&D expenditure for 09-10 is Rs. 829.27 crore, an
increase by 20.2 %. The turnover achieved by products and systems developed
in-house is Rs. 6723.12 crore an increase by 20.7 %. BHEL's IPR capital has
grown by 29.7 % taking the total figure for patents and copyrights filed by
BHEL to 1126 Numbers.
Some significant developments carried out during the year are as follows:
* To address the emerging market of supercritical power plants in the
country, BHEL has with in house expertise successfully completed design
development of Condenser for 660 MW steam turbine. The development
addresses a new design challenge with respect to large size of LP turbine
inter phased with single condenser together with higher loads etc;
resulting in a Condenser of single shell design, solid supported and having
tube length of about 18M. The new design was carried out using the state of
art design and analytical tools with focus on compactness, optimization,
revisiting pressure drop calculations etc. This in house developed design
would be offered to other Supercritical plants also in addition to 2 X 660
MW Barh project.
* Continuing with thrust in engineering technologies, BHEL has Developed,
Manufactured and Tested '1.0 MVA, Three-Phase, 33/6.6 kV High Temperature
Superconducting (HTSC) Power Transformer' with superconducting state at
770K using liquid nitrogen. HTSC transformer, in comparison with oil filled
transformer has high efficiency, smaller in size/weight/volume, ability to
withstand twice the capacity overload without insulation damage or loss of
useful life, lower impedance, better voltage regulation capability,
elimination of cooling oil thereby eliminating the possibility of oil fires
and related environmental hazards, as well as ability to provide more power
per unit volume. The transformer is being deployed for field trial in an
exiting sub-station.
* BHEL has successfully developed highest rating 310 MVA Single Phase
Generator Transformer (GT) for 5 x 800 MW Mundra project which is an Ultra
Mega Power Project. This is the highest rating Single Phase Generator
Transformer under testing, and is part of 16 Nos. 310 MVA GT for the
project. This newly developed GT has better performance with respect to
power loss etc; there by enhancing the competitive position of BHEL. This
development demonstrates capability of BHEL to supply such high rating GT
of 400 kV class to cater to the requirement of upcoming Ultra Mega Power
Projects.
* To meet the requirement of high back pressure, turbines in the output
range of 200-400 MW for desert application, BHEL has developed a new LP
Module with exhaust area 2x3.2 m2 and suitable for 0.17 ata to 0.34 ata
back pressure along with new type of blading to sustain high pressure drop
across the stage. This in-house developed design is used in 2x200MW
Tishreen Project in Syria and will be subsequently offered for projects in
similar application. With this order BHEL, will be entering into the
overseas market for Steam Turbines sets of similar applications.
* Developed design of 'a New Primary Air Fan variant for 600MW'. The
development comprises of a variant of Primary Air Fan (PAF 20/10.6-2),
total capacity of 225 m3/s powered by a 4 MW motor. The new design has
higher hub-tip ratio, based on M/s.Turbo Luft Technique (TLT) Axial Fan
design concept. Such types of Fans were completely outsourced till date
from M/s TLT, Germany. This Fan shall be used for PA Fan application for
North Chennai project and has also been chosen for other 600MW boilers for
Jindal and Shree Singhaji projects.
* In order to address emerging requirements of 765 kV transmission systems
BHEL has developed a Current Transformer (CT) design for 765 kV ultra high
voltage (UHV) transmission substations. The new design is based on gaseous
(SF6) insulation and light weight FRP-silicon composite insulators instead
of conventional oil insulation and porcelain insulator, to render a safe,
reliable and compact design as needed for 765 kV class transmission system.
* To meet the emerging demands of industry sectors, BHEL has designed and
developed IGBT based three-level diode clamped inverter for 1.8 MW
Induction Motor Drive for ID fan application. With this development BHEL
can address large volume of business for medium voltage drives based on
IGBT technology of ratings ranging from 1 MW to 4 MW for various
applications like gas boosters, boiler feed pumps, ID fans, PA fans and
centrifugal pumps, which were hitherto being offered only by multinational
companies.
* To continuously improve its offerings to customer, BHEL has developed
complete control system on state of art metsoDNA DCS platform for steam
generator, turbine, balance of plant equipment, SCADA including its HMI.
With this development BHEL has demonstrated capability to successfully
engineer, manufacture and test power plant automation with a new family of
DCS using in-house expertise.
* To address need of higher skill and competency needed in operating a
modern power plant, BHEL has developed and supplied a training simulator
along with DCS for 500 MW sets at Khaperkheda and Bhusawal. The server of
the training simulator is loaded with virtual plant module capable of
generating real time dynamic process parameters as they exist in an
operating power plant. The simulator consists of operator work station,
station model server and data processing unit along with four key softwares
viz. Dynamic Model Server (DMS) Software, Instructor Station (IS) Software,
Operator/Human Machine Interface (HMI) Software and Virtual Data
Configuration Software. Many customers may opt for this facility in the
growing power industry.
* BHEL has developed and supplied 'operation optimization and scheduling
package for hydro electric power plants' that can be used as a decision
support system (DSS) for operation scheduling and optimization of the
plants. The software uses mathematical model of the reservoir, water
conducting system and provides an optimal or best-fit solution to the
operational dilemmas faced by present day hydropower system operators under
ABT (Availability based tariff) regime. Use of the software can result in
significant improvement to daily energy production and revenues. This
product will go a long way in establishing BHEL as a supplier of advanced
software packages for hydro power plants which are integrated with our DCS
system.
* Develop and type tested 297 KW, 3 phase traction motor type IM3402BZ for
low voltage high current, 1500 Volt DC link IGBT based 3-phase drive
systems for 1600 HP AC EMU and DEMU application. With the development of
this traction motor, BHEL is now in a position to cater for market of IGBT
based new projects for 25 kV 1600 HP AC EMU's and AC-AC DEMU's.
* For the first time Digital Governor for the speed control of Hydro
turbine has been developed and supplied to NVDA for 3 X 5 MW Indirasagar
Left Bank Canal HEP. The equipment has been successfully commissioned for
the first unit .It has PLC control system with HMI, is Capable to
Communicate with SCADA, and has Digital metering of Governor Parameters
with start/stop facility, etc. The digital governor will have flexibility
in operation, stability of the set values, fine control of the machine and
fast response time.
* BHEL has established 'Centre of Excellence for Machine Dynamics (COE
MDF)' sixth in the chain. The COE shall add to furtherance of BHEL's
predominant position as a pioneer in carrying out R&D in the specialized
area of rotational dynamics including dynamic analysis and on-line
monitoring of rotating machines etc. and shall contribute mainly to
products such as Steam Turbines, ID & FD Fans, Switch gear and OLTC
Mechanism Analysis, Diesel locomotives, products requiring noise source
identification, sound power estimation, noise mapping studies, etc.
* Designed and demonstrated 220-Watts Photovoltaic (PV) Modules using 156-
mm Size Multi Crystalline Silicon Solar Cells. Use of PV modules of 156-mm
size solar cells as against current 125-mm has resulted in increased
production throughput by approximately 60%. Further, this Cost competitive
product is also suitable for MW Size PV Power Plants reducing the number of
modules required per KW thus increasing the reliability of the system.
* Developed new design of De-aerating condensers for use up to 125 MW Steam
power plants. De-aerating condensers can eliminate the use of conventional
de-aerators thus making the plant more compact and cost effective besides
improvement in heat rate in combined cycle application. BHEL will be
offering such De-aerating condensers for future projects.
F. HUMAN RESOURCE MANAGEMENT:
1) Industrial Relations:-
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.
10 meetings of the apex level bipartite forum, namely 'The Joint Committee
for BHEL' were held during the year. The primary focus of discussions in
the Joint Committee during the year was wage negotiations, which concluded
successfully with the signing of MoA on 30th December, 2009. Meetings were
also held with the representatives of Executives and Supervisors wherein
both work and their interest related issues were discussed.
The wage revision arrears were paid to all sections of employees.
In addition, The Presidential Directives on wage revision for Executives
and Supervisors were received on 30th April 2009.
A two day Workshop on 'Marching Towards Organizational Excellence - The
Role of Supervisors' was also organized. The members of the Supervisory
Associations were sensitized about the challenges being faced by the
Company and the role of Supervisors to overcome these challenges. The
Workshop focused on evolving strategies to meet the challenges and customer
commitment. The response from the Members was overwhelming. Syndicate
Groups comprising supervisors and the management were constituted to work
upon different themes. Suggestions made by them during the Workshop were
circulated to all Units/Divisions of BHEL for sharing at different levels
as well as for implementation.
A booklet compiling the suggestions/ recommendations given by various
syndicate groups during various workshops held at Bangalore, Puri and Goa
was released in the JCM held on 3rd August, 2009. The theme of these works
shops were : (1) Enhancing organizational effectiveness, (2) Roadmap to
excellence, (3) Increasing effectiveness of the employees and Tackling
Business challenges. These suggestions pertain to strengthening of
participative fora, percolation of discussions in the Joint Committee to
Plant level, multi skilling, redeployment, effective utilization of
critical machines, enhancing the productive time of man and machines,
reduction in rejection and rework, maintenance and upkeep of machines,
three shift working, enhancing productivity of employees, dissemination of
company information, cost cutting measures at workplace and wastage
control, improving quality and bringing quality consciousness among
employees, reduction in cycle time, sequential supplies from Units etc.
Similar workshops at the Unit level on unit level issues were held wherein
the participants from all the three cadres took part. Suggestions on cost
reduction, meeting the production targets, sequential delivery and quality
of goods were the focus areas. The involvement of all the cadres in the
workshop had a positive impact on the working of the units.
46 meetings of the Plant Councils and 236 meetings of the Shop councils
were held during the year in various units of the Company.
2) Awards won by BHEL, Units & employees:
* Prime Minister's Shram Awards 2007 (declared on 15th August 2009 by
Ministry of Labour)
Prime Minister's Shram Awards are given to workmen in Private and Public
Sector of Central & State Government in recognition of their distinguished
performance, innovative abilities, outstanding contribution in the field of
productivity and exhibition of exceptional courage and presence of mind. 1
No. Shram Bhushan Award was won by an employee from Haridwar unit; 2 Nos.
Shram Vir Awards were won by two employees from Haridwar unit; 1 No. Shram
Shree Award was won by an employee from Haridwar unit; 1 No. Shram Devi
Award was won by 4 employees from EPD-Bangalore unit.
- National Safety Awards 2007 (declared by Ministry of Labour)
National Safety Awards are given to recognize good safety performance on
the part of industrial undertaking (covered under Factories Act 1986) and
to stimulate and maintain interest of both the management and the workers
in accident prevention programmes. Ranipet unit was declared Runner-up in
National Safety Award.
- 10th National Award for Excellence in Energy Management 2009
(Confederation of Indian Industry)
National Award for Excellence in Energy Management 2009 was awarded to
Hyderabad unit. The unit has been winning the prestigious National Award
consecutively for the last three years.
3) Human Resource Development:
In the year 2009-10, total number of employees exposed to different types
of training during the year is 44307 giving a 18.98 training man days per
employee. In addition to employees, 3626 Act Apprentices were trained in
different units giving 330 training man days per apprentice.
Customer training has been a regular activity at BHEL and during the year,
1231 customers were trained giving 61548 man days. Rising to the social
commitment, 7011 vocational trainees from different professional
institutions were also trained.
The Training System has been streamlined and training programmes have been
held to enhance competencies in the following areas :
Technical / Functional, Managerial and Behavioural / Leadership
Aligning HRD efforts to the Business Strategies has been the prime concern.
During the year 2009-10 HRDI conducted 88 programmes spread over 422 days.
A total of 1762 participants have been covered giving 8193 training man-
days. The types of programmes conducted are:
* Core Programmes:
- Strategic Management for Sr. Dy. General Managers and Addl. General
Managers
- General Management for Sr. Managers and Dy. General Managers
- Young Managers for Dy. Managers and Managers
- Self Starters' Programme for Sr. Executives
* Managerial, Behavioural & Leadership -Competency based Programmes
* Functional Competency based Programmes
* Extension Programmes
* Strategic Need Based Programmes
* Other Programmes
Leadership development is carried out through various programmes for all
levels of executives:-
* For Junior Level of Executives:-
- Executives Development (2-weeks) Programmes
- Self Starters Programmes (2-weeks)
- Young Managers (2-weeks) Programmes
* For Middle Level of Executives -
- General Management (2-weeks) Programmes
- Middle Managers (2-weeks) Programmes
* For Senior Level Executives:-
- Strategic Management (2-weeks) Programmes
In addition, focused short duration programmes have also been conducted by
HRDI. A few are :
* Strategic Thinking
* Team Work and Inter-Personal Relations
* Creative Problems Solving
* How to Influence
* Communication Skills
* Organizational Development
* Enhancing Sense of Responsibilities
* Values Lab
* Leadership Excellence
* Appreciative Inquiry
* Excellence Laboratories etc. HRD Heads Meet
Two HRD Heads Meets were conducted during the year at HERP-Varanasi and
HRDI, Noida for facilitation, coordination and planning for future HRD
activities at HRDCs and HRDI.
Enhancing effectiveness on HRD - Feedback Surveys/ Special studies by HRDI
The following surveys were conducted for knowing the perception of
employees on various aspects of HRD:
(i) Feedback Surveys on Mentoring
This survey revealed the status of mentoring, the gains and the problems
being faced by mentors and mentees. Suitable steps have been taken for
improvement.
(ii) HRDI Image Survey
This was conducted organization wide and the survey revealed that people
are highly appreciating the role being played by HRDI. This also indicated
a few areas for improvement especially infrastructure.
(iii) Feedback on Programmes held at HRDI during the year
* Report on analysis of programme feedback (Reaction Evaluation) data for
2009-10
Participant's Feedback data of 59 programmes conducted by HRDI was captured
in software -Persys. The overall feedback has been as follows:
The programme administrative feedback - 86.4%
The programme effectiveness feedback - 84.3%
* Post Programme Feedback
Within 3-6 months of the completion, 35 programmes were evaluated with 166
responses.
The extent to which learning's utilized in Personal and Official work life
- 79.6%.
(iv) A study on Benchmarking Training Infrastructure:
In order to benchmark the infrastructure facilities at HRDI, a Benchmarking
Study was conducted with seven institutions. The study emphasized the need
of developing infrastructure facilities at HRDI.
(v) Effectiveness of ETs training programmes:
* The overall feedback of one year ETs training across BHEL Units has been
found to be excellent - 81.5%.
* Report on feedback of ETs (sample size of 291 ETs across BHEL units) for
Basic Human Process Lab module was prepared. The feedback data was analyzed
and it was found to be very useful - 77.4%.
THRUST ON MENTORING:
Mentoring has been made compulsory for every E.T. since the year 2008-09
and during the year 2009 - 10, 475 Mentors were trained in 15 training
programmes held during the year at HRDI and Units. 4 Nos. of Review
workshops have been conducted for the Mentors and Mentees of previous
batches to ascertain the effectiveness and give necessary inputs.
UPGRADATION OF INFRASTRUCTURE FACILITIES IN HRDI:
2 X 44 TR AC system installed for better facilities in hostel rooms. This
has substantially improved the satisfaction level of participants.
ENGINEER/EXECUTIVE TRAINEES INDUCTION TRAINING:
ETs were provided one year training according to Dakshata 2007 manual at
BHEL Units followed by the successful absorption in BHEL. As a part of the
training, On the Job Training (249 days duration) has been conducted for
each ET.
During the year, 1760 numbers ETs (4 batches) were successfully absorbed.
Also 600 ETs additionally joined in March 2010 and their training is going
on smoothly. Basic Human Process Laboratory, a unique personal growth
module is the main highlight of the ETs Training.
OTHERS Awards:
* Bhopal received Best Establishment in regional competition of apprentices
by ATI, Ministry of Labour, Govt, of India.
* Ranipet - Turner trade apprentice won the 'Best Apprentice Award' in the
All India Skill competitions organized by DGET / Ministry of Labour, Govt,
of India.
* Trichy - Two Act Apprentices have emerged as Winners and Two Apprentices
as Runner-up in the All India Skill Competitions organized by RDAT. Two Act
Apprentices have been declared as Winners in the Regional Skill
Competition.
* Bhopal - Under Group category 'B', HRDC was awarded llnd prize under the
Rajbhasha Running Shield by the Hindi work Evaluation Committee for the
year 2009-10.
Publications:
* A Book 'Effectiveness Mentoring for Developing Human Resources' authored
by Shri Parth Sarathi, GM, HRDI has been published. In addition, three
articles were published in the prestigious 'Pfeiffer Annual : Training'
authored by three executives in HRDI / HRDC, Hyderabad. These executives
are : Shri Parth Sarathi, GM, HRDI, Ms. Rekha Bharadwaj, AGM, HRDI and Shri
Amitabh Jha, Manager, HRDC, RC Puram, Hyderabad.
Monographs:
Four Monographs were brought out by HRDI:
* Communication Skills
* Achievement Motivation
* Self
* Feedback-Giving and Receiving
4) Manpower strength:
The manpower strength of the Company as on 31.03.2010 was 46274.
5) Information regarding Presidential Directives:
The company has been following the Presidential Directives and guidelines
issued by the Government of India from time to time regarding reservation
for SCs and STs. During the year, various development activities focused on
Socio-Economic Development
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. Representation of SC/ST/OBC employees :
The overall representation of SC/ST/OBC employees in total manpower was
19.64%, 5.07% and 16.51 % for SCs, STs and OBCs respectively as on
01.01.2010.
However, the reservation in direct recruitment during the year (as on
31.12.2009) has been 19.00% for SCs, 6.05% for STs and 26.97% for OBCs.
This does not include offers issued, but joined after 31.12.2009, which
takes care of the required percentage reservation, especially in ST
category.
The Annual Statement in the prescribed format showing the representation of
SCs, STs and OBCs as on 01.01.2010 and number of appointments made during
the preceding calendar year, as furnished to the Government, is given at
Annexure-A.
Manpower strength of Physically Challenged employees as on 01.01.2010:
Presently, we have a total of 784 Physically Challenged employees in the
Company as on 01.01.2010. The group-wise manpower in the Company as on
01.01.2010 is given at Annexure-B.
G. RIGHT TO INFORMATION ACT, 2005:
* BHEL is a front-runner in implementing the Right to Information Act, 2005
in letter & spirit. A Central Public Information Officer (CPIO) & a Central
Assistant Public Information Officer (CAPIO) at the company level and 14
CPIOs for each of the administrative units are functioning as part of RTI.
* 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 also been issued to administrative units and the concerned
senior officials to ensure compliance to the mandatory requirements of the
Act.
* 670 applications were received, seeking information during the year 2009-
10. All applications received in BHEL have been disposed off within
specified time frame in line with the provisions of the Act.
* BHEL also took a lead role in the workshop organized by SCOPE on Right To
Information in September, 2009
H. 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 systems through regular audits, system reviews and
monitors compliance of various policies and procedures. Functioning of
Internal Audit and adequacy of internal control system is reviewed by Board
Level Audit Committee which is supported by Unit Level Audit Committees.
* The company has put in place adequate internal control measures in major
risk areas. These measures are in the form of various codes, manuals and
procedures issued by the management covering all critical and important
activities viz. Budget, 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.
I. MERGERS & ACQUISITIONS:
BHEL has framed guidelines for streamlining its internal processes related
to mergers & acquisitions in the identified areas for inorganic growth.
BHEL intends to pursue acquisition opportunities to achieve its objectives
like access to technology, access to global markets, securing global supply
sources, diversifying into related & new business areas. BHEL is actively
pursuing acquisition opportunities in Europe & USA in the areas of
renewable energy and other potential areas like transportation &
transmission. BHEL has also empanelled various advisors for Mergers &
Acquisitions to assist the company in its M&A endeavors.
J. OPPORTUNITIES AND THREATS World:
The global economic recession that began in 2007 and continued into 2009
has had an unforeseen impact on global energy markets in the near term. As
per International Energy Outlook (IEO) 2010, total world marketed energy
consumption reduced by 1.2 percent in 2008 and by an estimated 2.2 percent
in 2009, due to contraction in economic activities. Countries world over
have responded to the threat of economic meltdown as a result of financial
crisis with prompt and co-ordinated fiscal and monetary stimulus packages
on an unprecedented scale. The resulting pace of recovery has been uneven
so far, with China and India leading and Japan and the European Union
member countries lagging.
World Energy Outlook 2009 anticipates energy demand to increase by 40% from
2007 to 2030, or by an average of 1.5% p.a. Total primary energy
consumption, including electricity generation, is expected to grow by 0.5
percent per year from 2007 to 2030. The largest increase is expected to be
in the commercial sector, where service industries continue to lead demand
growth, followed by the residential sector and the industrial sector.
Fossil fuels are expected to remain the dominant sources of primary energy
worldwide accounting for more than three-quarters of the overall increase
in energy use between 2007 and 2030. Globally, 4800 GW of power generation
capacity is expected to be added by 2030, with around 28% coming from
China.
China & India account for just over half of the increase in world primary
energy demand by 2030. Around 85% of the increase in global coal
consumption comes from the power sector in China & India. Nuclear output
nonetheless increases in absolute terms in all major regions except OECD
Europe. It is expected that, modern renewable technologies will grow most
rapidly overtaking gas to become the second largest source after coal, soon
after 2010. The share of non hydro renewable energy in total power
generation is likely to grow from 1% in 2006 to 4% in 2030.
The future global primary energy demand is expected to be driven by
increasing requirements of the rising population, the overall rate of
economic growth, and the availability and affordability of energy; energy
fuel mix and the efficiency of current and future energy technologies used
by the fast emerging economies. Technology, population growth and the role
of renewable sources of energy will be the key factors in influencing the
future energy growth path. The threat of climate change, caused by rising
global temperatures, will have profound impact on the way we produce,
transport and use energy.
Arising from the challenges of availability, accessibility, acceptability
and accountability, energy sector will see policy innovations and
technology innovations in near term.
India:
In India, economic recovery, which began around the second quarter of 2009-
10, has since shown sustained improvement. Industrial recovery has become
more broad-based and is expected to take firmer hold on the back of rising
domestic and external demand. After a continuous decline for nearly a year,
exports and imports have expanded since October/November 2009. Flow of
resources to the commercial sector from both bank and non-bank sources has
picked up. Surveys by the RBI as well as others suggest that business
optimism has improved. Under the assumption of a normal monsoon and
sustained good performance of the industry and services sectors, the
Reserve Bank of India has projected real GDP growth for 2010-11 at 8.0 per
cent with an upside bias.
The developments on the inflation front are, however, worrisome. Headline
wholesale price index (WPI) inflation accelerated from 1.5 per cent in
October 2009 to 9.9 per cent by March 2010.
Prospects of the monsoon in 2010-11, volatility in crude oil prices and
likely building up of demand side pressures are some of the uncertainties
which can cloud the growth outlook. Further there are initial signs of
gradual withdrawal of fiscal stimulus and the growth-supportive monetary
policy, unless calibrated carefully this can also have down-side risk to
the growth process.
Power Sector:
An accelerated growth of power sector is imperative for the overall growth
and development of the Indian economy. With GDP growth at an average of 8.5
% during 2005-10 and energy demand at more than 7%, country faced a peak
deficit of about 12% and energy shortage of 11% in Financial Year 2008-09.
With the economy poised to regain its high growth trajectory of more than
8% with aspiration of around 10%, it is imperative to reduce, if not
bridge, the huge power demand-supply gap. Indeed, according to the CEA's
17th Electric Power Survey, energy demand is forecast to increase by a
staggering 64% by 2017 and 126% by 2022 from current levels.
Fully realizing the criticality of this sector, over the past few years the
Government of India has been taking path-breaking initiatives for rapid
growth of the sector
on the legal and regulatory front as well as the business environment
front. Electricity Act 2003, National Electricity Policy, National Tariff
Policy, Mega Power Policy etc. have created an enabling and investor-
friendly policy environment. All these initiatives at apex level coupled
with micro-level initiatives in Generation, Transmission and Distribution
segments clearly demonstrate the Government's strong commitment to build an
efficient and rapidly growing electricity sector with large scale private
and foreign investments and state of art technology in every segment.
As a result, today power sector is witnessing a lot of vibrancy and action
on all fronts offering growth opportunities for all stakeholders: Project
Developers, EPC Contractors, Technology & Equipment Providers and
Transmission and Distribution Companies. BHEL along with few private
players are building power plant equipment manufacturing capacities to
match the demand. But at the same time lack of vigour and matching
initiatives from BoP suppliers has become a major bottleneck in the project
executions.
Lack of synchronization of capacity and capability building efforts by
different players in the entire power value chain; plight of
infrastructure; skill deficit; non-availability of adequate fuel and key
materials and to some extent, lack of level playing field for domestic
manufacturers are the biggest obstacles for growth of the sector.
Higher rating thermal sets with Super Critical parameters, Ultra High
Voltage Transmission Systems, Advance Class Gas Turbines and higher rating
Nuclear Power Plants are planned to be introduced during the XI Plan and
beyond. Capacity creation in future would demand up-gradation to higher
range equipments, faster capacity augmentation and shorter delivery cycle
time with better project execution.
Industry Sector:
After witnessing a very high degree of uncertainty and volatility driven by
the scourge of recession, the country's growth in GDP has been estimated at
7.4 percent during 2009-10 surpassing advance estimates of 7.2 per cent
partly due to the base effect but largely by the rebound in business and
consumer confidence.
Industrial output, which was affected by the cyclical slowdown and
international commodity price shocks in 2007-08 followed by the global
recession, recovered substantially in 2009-10. The use-based classification
of industries shows that capital goods since September
2009 have registered double-digit growth, which is expected to support the
growth momentum in several downstream industries. According to the
estimates released by Central Statistical Organisation (CSO), Index of
Industrial production (IIP) registered a growth rate of 10.4% in 2009-10
from 2.8% in 2008-09, up by more than three times. Capital Goods registered
19.2% growth as compared to 7.3% previous year.
As per CMIE, the industrial production in fiscal 2010-11 is expected to
rise by 9.2% on the top of 10.4% growth registered during 2009-10. The
growth is expected to be driven largely by improvement in availability of
basic inputs and huge capacity additions. The acceleration in consumption
and investment growth will contribute to a higher growth in consumer
durables and capital goods output.
K. POSITIONING FOR THE FUTURE:
* BHEL is well on its track to become a $10-11 billion turnover company by
Financial Year 2012 in line with its strategic plan. To congregate with the
Country's target of power generation capacity addition of more than
1,75,000 MW by 2017, orders for XI Plan have already been placed with 55%
share of BHEL. It is expected that the share of private sector projects and
the share of supercritical thermal power projects would be much higher in
the XII & XIII Plan periods.
* Company has adopted 'Capacity and Capability' enhancement strategy and
accordingly capability to deliver 15,000 MW p.a. has been realised. Further
expansion to 20,000 MW by March 2012 is in progress. By ensuring that
investments are timely, well planned and scalable, the company is getting
ready for harnessing emerging opportunities in domestic Power sector.
* During XI plan period a capital investment of Rs. 5500 crore has been
envisaged towards capacity augmentation of existing products along with
introduction of higher rating nuclear sets, 765 kV transformers and other
associated transmission and distribution equipments. Transformer
manufacturing capacity is also in place for 45000 MVA p.a.
* To maintain a balanced growth, BHEL has increased its focus on
Transportation and Transmission sectors. Considering the need of the
Country to transmit bulk power over long distances.
BHEL would continue its development of 1200 kV products such as Transformer
and CVT.
* Diversification through inorganic growth calls for capturing emerging
opportunities in nuclear power, transmission, transportation and renewable
energy. Coupled with this, BHEL would continue to pursue strategic
alliances by way of Joint Ventures to leverage equipment sales in
supercritical thermal projects, and for sourcing of technology, critical
inputs and equipments.
* Focus on consolidation in existing international markets and tapping
opportunities in new markets will be the drivers for BHEL to expand its
international footprint. Manufacturing and service presence in export
markets will be explored for geographical diversification.
* To achieve time cycle reduction, BHEL is implementing companywide SAP/ERP
covering technical, commercial and manpower areas. Further, appropriate
organization structures are planned to be put in place with a focus on key
functions like project engineering and project management. Product cost
competitiveness is a prerequisite for maintaining leadership position.
Capability-building initiatives like Design to Cost (DTC), Lean
Manufacturing and Purchase & Supply Management (PSM) would continue to be
pursued.
* Against the backdrop of Climate Change, there would be increased focus of
BHEL on low Carbon Path Technologies such as Ultra Supercritical, IGCC,
Solar Power etc. BHEL would play a lead role in 'development and
deployment' of advanced Ultra Supercritical Power Plant under the proposed
National Mission for Clean Coal (Carbon) Technologies.
* Towards enhancing and strengthening manpower, an induction of 18-20,000
people has been planned up to year 2012. During 2007-10, around 12,000
persons have been recruited.
* Associated with the growth agenda, the engineering & technology character
of the organization will be enhanced with enhanced focus on innovation and
R&D. BHEL plans to increase R&D spend to at least Rs. 900 crore by 2011-12.
Greater standardisation of components and sub-systems that will drive cost-
competitiveness and faster delivery is being pursued.
* BHEL will continue to move ahead on its Corporate Social responsibility
(CSR) Policy comprising eight thrust areas. Accordingly the company will
enhance its responsibility towards socio-economic and community development
programmes in various villages located near its manufacturing plants and
projects sites spread across the country.
* In conformity with its concern for the environment, BHEL has been
contributing to the national effort for developing and promoting renewable
energy based products on a sustained basis. As its contribution to the
Jawaharlal Nehru National Solar Mission, BHEL is in the process of setting
up two eco friendly Grid-Interactive Solar Photovoltaic (SPV) Power Plants
of 2 MW & 1 MW, on turnkey basis, for KPCL in Karnataka.
L. RISKS AND CONCERNS:
The indicative projections of economic growth for 2010-11 appear
reassuring, but we need to recognise the major downside risks to growth.
The prospects of sustaining the global recovery hinge strongly on the
revival of private demand which continues to be weak in major advanced
economies. While recovery in India is expected to be driven predominantly
by domestic demand, a sluggish and uncertain global environment can have an
adverse impact. If the global recovery gains momentum,
commodity and energy prices may harden further which could add to
inflationary pressures.
In Indian power sector, massive power capacity additions are planned which
warrant matching capabilities in the country to produce and deliver power
plant equipment as well as for evacuation of power generated. At the same
time, in many of the project reviews, the subject of long delivery cycle
for critical input keeps cropping up. There are delivery pressures all
around because of the growing demand. In this context, it becomes all the
more necessary to develop additional capability in the field of Balance of
Plant (BOP) areas. When every project is engineered, tendered and ordered
afresh, the associated business risks are preventing aggressive investment
decisions by vendors, leading to further contraction of capacities in
Balance of Plant like coal and ash handling systems, water treatment
plants, cooling water systems, air-conditioning & ventilation systems,
cooling towers, construction equipment, civil works & services, etc.
At the time when coal allocation is being preferred to Super-critical
Projects, technology leaders are not willing to share new technologies and
insisting on their terms/ imposing licensing restrictions on territories.
Further, considering the growing power demand, many domestic companies have
announced their intent to tie-up with leading international players from
China, Japan, Europe etc. to set up manufacturing bases in the country.
This could escalate intensity of competition for BHEL in long-term.
In most of the business areas in which BHEL operates, the growth prospects
are dependent on policy decisions at the national level 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 23, 2010
ANNEXURE-A
Name of the Public Enterprise : Bharat Heavy Electricals Limited, New Delhi
Annual Statement Showing the Representation of SCs, STs and OBCs as on
01/01/2010 and No. of appointments made during the preceding calendar year
2009
Groups A B C D E F G H I J K L M N
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Group A 12718 1890 685 1707 549 105 31 178
Group B 11821 1929 292 596 37 4 6 0
Group C 19203 4558 1265 4829 1776 340 106 459
Group D 1213 319 46 317 0 0 0 0
(Exc. SW)
Group D 180 170 1 3 0 0 0 0
(SW) ;
Total 45135 8866 2289 7452 2362 449 143 637 0 0 0 0 0 0
A = Representation of SCs/STs/OBCs (As on 01.01.2010) Total number of
employees
B = Representation of SCs/STs/OBCs (As on 01.01.2010) SCs
C = Representation of SCs/STs/OBCs (As on 01.01.2010) STs
D = Representation of SCs/STs/OBCs (As on 01.01.2010) OBCs
E = Number of appointments made during the calendar year 2009 By Direct
Recruitment Total
F = Number of appointments made during the calendar year 2009 By Direct
Recruitment SCs
G = Number of appointments made during the calendar year 2009 By Direct
Recruitment STs
H = Number of appointments made during the calendar year 2009 By Direct
Recruitment OBCs
I = Number of appointments made during the calendar year 2009 By Promotion
Total
J = Number of appointments made during the calendar year 2009 By Promotion
SCs
K = Number of appointments made during the calendar year 2009 By Promotion
STs
L = Number of appointments made during the calendar year 2009 By
Other Methods Total
M = Number of appointments made during the calendar year 2009 By
Other Methods SCs
N = Number of appointments made during the calendar year 2009 By
Other Methods STs
** In BHEL there is no appointment at induction level by promotion
ANNEXURE-B
REPRESENTATION OF THE PERSONS WITH DISABILITIES
Group A B C D E F G H I J K L M N O P Q R
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Group A 12718 1 11 134 0 1 4 549 0 1 7
Group B 11821 11 13 116 0 0 0 37 0 0 0
Group C 19203 35 26 423 12 12 15 1776 2 3 58**
Group D 1393 1 3 10 0 0 0 0 0 0 0
Total 45135 48 53 683 12 13 19 2362 2 4 65
A = No. of Employee (representation) Total
B = No. of Employee (representation) VH
C = No. of Employee (representation) HH
D = No. of Employee (representation) OH
E = DIRECT RECRUITMENT (During the calender year 2009) - No. of Vacancies
Reserved VH
F = DIRECT RECRUITMENT (During the calender year 2009) - No. of Vacancies
Reserved HH
G = DIRECT RECRUITMENT (During the calender year 2009) - No. of Vacancies
Reserved OH
H = DIRECT RECRUITMENT (During the calender year 2009) - No. of Vacancies
Made (appointed) Total
I = DIRECT RECRUITMENT (During the calender year 2009) - No. of Vacancies
Made (appointed) VH
J = DIRECT RECRUITMENT (During the calender year 2009) - No. of Vacancies
Made (appointed) HH
K = DIRECT RECRUITMENT (During the calender year 2009) - No. of Vacancies
Made (appointed) OH
L = PROMOTION* - No. of Vacencies Reserved VH
M = PROMOTION* - No. of Vacencies Reserved HH
N = PROMOTION* - No. of Vacencies Reserved OH
O = PROMOTION* - No. of Vacencies Made (appointed) Total
P = PROMOTION* - No. of Vacencies Made (appointed) VH
Q = PROMOTION* - No. of Vacencies Made (appointed) HH
R = PROMOTION* - No. of Vacencies Made (appointed) OH
Note:
(i) VH stands for Visually Handicapped (persons suffering from blindness or
low version)
(ii) HH stands for Hearing Handicapped (persons suffering from hearing
impairment)
(iii) OH stands for Orthopaedically Handicapped (persons suffering from
locomotor disability or cerebral palsy)
* There is no reservation in Promotion from Group B to A and within Group
A. In BHEL within Group-C & D, career based promotion policy is followed,
wherein all employees on completion of prescribed eligibility period in a
Grade and subject to attaining satisfactory levels in conduct and
performance are promoted to the next higher grade.
** In Group C, number of PWD joined includes few persons whose recruitment
process was already initiated in 2008 but joined in 2009.
ANNEXURE - 4 TO THE DIRECTORS' REPORT
Conservation of Energy:
Energy Management is an important thrust area in BHEL. Energy Cost as a
percentage of Gross Turnover, net of excise, for the financial year 2008-09
was 0.99% as against 1.23% in the previous year. BHEL's focus on Energy
Management is through following:
A. Energy Awareness - Conducting awareness programme at offices, factory,
site and township.
B. Energy Conservation - Identification of thrust areas for conservation of
energy by arresting leakages, use of alternate fuel etc.
C. Energy Efficiency - through modification of existing systems,
establishment of a system for collection, analysis, and reporting on the
organization's energy consumption and costs.
D. Use of Renewable energy resources.
Following main activities were performed during the financial year:
1) National Energy Conservation Week is celebrated every year in India.
Across the company, the week (14-21 December, 2009) was celebrated and
various activities for awareness generation on Energy Conservation were
organized.
2) The Meet of Nodal Officers on Energy Management was held on 21st
December 2009 at Corporate Office. Nodal Officers shared the new
initiatives taken and the best practices being followed. The group also
visited 'LED Expo' held at Pragati Maidan, New Delhi to see the LED
lighting fitting/ fixtures and exploring LED's usage for lighting
applications.
3) BHEL presented two case studies; on 'Energy Conservation'; and 'Boilers
etc. - Steam Systems' in one-day seminar on Energy Efficiency for PSEs
organized by DHL
Technology Absorption and Research & Development
Research & Development
1. Specific areas in which R&D carried out } Given in the
by the Company } Directors' Report
2. Benefits derived as a result } under 'R&D and
of the above R&D } Technology'
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 parameters
* Advanced control and instrumentation platform for thermal power plant and
industrial application
* Performance Analysis, Diagnostics and Optimization (PADO) systems for
thermal as well as hydro power plant 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.
* Pulverisers
* Compressors
* High efficiency boiler feed pumps
* Atmospheric and Circulating Fluidized Bed Combustion (CFBC) boilers
* Large size hydro power plants with higher efficiency and longer life
* HVDC transmission systems, 765 kV, 1200 kV Transmission systems
* Flexible AC Transmission systems, including devices such as Thyristor
Controlled Series Compensation, phase shifting transformer, static
synchronized compensator (STATCOM), controlled shunt reactor, etc.
* IGBT - based applications in transportation sector
* Gas insulated switchgear
* Industrial steam turbines
* Efficient, reliable and cost effective transportation systems like three-
phase AC drive system for diesel electric locos
* Non-conventional energy systems such as solar, wind etc.
* Simulators
* Advanced Fabrication Technologies
* Surface coatings including ceramic applications
* Vibration and noise reduction
* Residual life assessment studies
* Deployment of new technologies for reducing Cycle time and cost
* Specialized engineering software applications
* Knowledge Management
* Intelligent machines & robotics
* Nano-technology applications
* Hydrogen energy and fuel cells
EXPENDITURE ON R & D
Total - Rs. 829.27 crore
a) Recurring - Rs. 791.50 crore
b) Capital - Rs. 37.77 crore
Expenditure as a percentage - 2.43%
of total turnover
Technology Absorption and Adoption:
Details of technology imported during the last 5 years:
Technology Year of Absorption status
import
Once through boilers 2005 Technology absorption in progress.
Pumps for higher rating 2007 Technology absorption in progress.
thermal power plants
Large size forgings 2010 Technology Transfer to commence
by 2nd Quarter of 2010-11.
Foreign Exchange Earnings and Outgoings:
a) Activities relating to export information are given in the Director's
Report under the heading ' International Business'.
b) Total foreign exchange used and earned: 2009-10 2008-09
(i) Foreign Exchange Used 7587 6043
(ii) Foreign Exchange Earned 8263 5025
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 23, 2010 |