Power equipment supplier Bharat Heavy Electricals Ltd (Bhel) is augmenting its manufacturing facility as India unveils an ambitious capacity addition programme in power generation to meet the electricity requirements of a fast-growing economy. The company is already meeting the bulk of equipment required for conventional power stations such as thermal, hydro and nuclear. It is also raising its profile as an equipment supplier for non-conventional power plants like wind and solar. The company is also ramping up its manufacturing facility for locomotives, even as it is pursuing new business opportunities in the defence sector. Bhel chairman BP Rao talks to FE’s Noor Mohammad about his company’s business plans. Excerpts:
Bhel is supplying equipment to power, transport and defence sectors? Which sector are you most bullish about?
There is definitely big growth in the power sector because the NTPC-DVC bulk tendering for the supply of 660 mw supercritical equipment is underway. The company has a strategy of balancing growth from other sectors to avoid dependence on one sector. This is essential for the company. Power transmission is another sector the company is focusing on. Transportation is also an important area. We are also pursuing new business initiatives in the defence sector.
What are your company’s plans for the solar power sector?
We have big plans for meeting the requirement of solar power equipment. We already have a manufacturing facility for solar PV at Bangalore with 8 mw a year capacity. Meanwhile, we also plan to set up a 250 mw manufacturing facility for silicon wafers, solar cells and PV modules in partnership with Bharat Electronics Ltd (BEL). However, we are very careful in selecting the technologies, since the field is changing very fast. We want to go in a modulated fashion and are also keen on solar thermal technology.
Do you think that Bhel is a late entrant into wind power equipment manufacturing?
We were a pioneer in the business of wind power equipment manufacturing. But later, when the business model changed and land acquisition became the equipment supplier?s job, we exit the sector. But now, we are reentering the sector. We are going to tie up with a technology partner soon.
What are you plans for the nuclear power sector?
Bhel has supplied generating equipment for 80% of the nuclear power generation installed in the country. We have signed an agreement with Nuclear Power Corporation (NPCIL) to supply turbine-generators of 700 mw rating. Meanwhile, we are looking for a technology partner to set up a manufacturing facility for turbine-generators with capacity of 1,000 mw and above.
How much contracted capacity addition do you expect to commission during the 11th Plan?
We should be able to commission contracted projects worth 35,000 mw during the current Plan. Of this, we expect to commission 10,000 mw capacity in the current financial year.
What are the key challenges before Bhel in the power sector?
The government has envisaged capacity addition of 1,00,000 mw during the coming 12th Plan. This is in addition to 78,700 mw targeted in the current Plan. The sizes of power projects are also growing and bringing in new complexity in concepts, systems, policies, processes and procedures. Historically, the country has achieved less than 50% of the capacity addition target. So, the focus of policymakers has shifted from ordering to execution. Accelerating project execution is our biggest challenge. To meet this challenge, we have taken various initiatives like expansion in manufacturing capacity, strengthening of the human resource base, vendor base expansion and extensive use of information technology (IT) based solutions.
As far as competition from domestic players is concerned, there is enough demand in the domestic market for all players. Being the first mover in the market, we will have the natural advantage of cost, technology and a reliable service network. We manufacture the bulk of our products in-house. This should give us an edge over others.
We are only worried about cheap imports from China and have sought a level playing field. Anyway, customers have realised the long-term benefits of using Bhel equipment and they are coming back to us.
You are already manufacturing locomotives and traction equipment for the Indian Railways. Do you plan to expand your manufacturing capacity?
Transportation is a major area of focus for the company. The railways’ requirement has gone up. It is coming out with public-private partnerships (PPP) for implementing projects. The demand for our conventional products is also growing. Last year, we received orders for the supply of 150 locomotives. This was in addition to the earlier order book of 50 locomotives. We expect that the railways is going to increase its sourcing from Bhel up to about 100 locomotives a year. We are expanding our capacities at Jhansi and have big expansion plans for the transportation sector.
The railways has floated tenders for setting up manufacturing facilities for electric locomotive components and diesel locomotives at Dankuni in West Bengal and Marhowra in Bihar, respectively. Bhel has signed memorandums of understanding (MoUs) with Alstom and GE for participating in the tendering. We will be participating in future tenders as well. We also plan to build coaches for the railways.
What are your plans for the de-fence sector?
We have been making naval guns and doing integrated platform management systems for naval applications. We are also talking to the Army as well as the air force. We are discussing other areas with the Navy as well.
