BHEL reduces capacity utilisation by 60-70%
At a meeting convened by Singh’s principal secretary Pulok Chatterji on November 23, BHEL CMD BP Rao said with cash reserves depleting, his PSU is facing cash flow issues owing to lack of fresh orders from the power sector.
“In fact, BHEL is very tight for cash and capacity utilisation may go down drastically in future if the power sector continues to be plagued with problems,” an official who attended the meeting quoted Rao as saying. The CMD also told Chatterji that with the banks not forthcoming to electricity generation sector, the producers are becoming cautious, which has possibly led to BHEL’s order book drying up. He said BHEL’s capacity utilisation is already down by 60-70 per cent.
The cash-strapped PSU has till recently been forced to deliberately withhold dispatches of finished equipment to some of its buyers during the last quarter ostensibly to exert pressure on them to make payments. Although the move yielded some dividends for the company, but it is also a worrying indication of the navratna company’s financial strength. Its problems have multiplied as power generating companies and firms producing cement and steel are understood to be going slow on their projects.
BHEL’s net profit for the second quarter of the current financial year was nearly