?Supply-chain management is a big constraint in this country?

B Prasada Rao was recently named chairman & managing director of Bharat Heavy Electricals Limited (BHEL). He has more than three decades of experience in the country?s biggest capital goods company. He is targeting to make BHEL a $10-billion company by 2012. Rao, in an exclusive interview to FE?s Simran Arora, talks about the growth opportunities for the company, challenges from Chinese equipment manufacturers and upcoming joint ventures. Excerpts:

You have just taken over. How does it feel and what are your immediate plans?

It is great, but challenging. I am looking at going beyond $10 billion, which means a growth of 25%. So, leading the company on a year-on-year basis to scale up the operations is a big challenge. Besides, with the market growing, there is a lot of competition with new players coming in. We have to strengthen ourselves. Being an integrated power plant equipment manufacturer, we have some inherent advantages, which we need to consolidate and build on.

What is your short-term vision?

Well, I have been a part of this company for the last 31 years and I have also been a part of the strategy planning for the company. We are charting out the plan for this company for the next five years in accordance with our goal to reach a figure of $10 billion by 2012. We are not only on the right path to reach that level, but also to exceed that level.

How do you plan to tackle the Chinese threat?

We have taken several steps to tackle the Chinese threat. We compete with better equipment and we are also targeting to offer prices that the Chinese are offering. In addition, we are also doing what is called design to cost-purchase and supply management. In fact, supply chain management is a big constraint in this country. We don?t have many suppliers who can supply all the needs of power plant equipment. So, we are looking at developing some of them. We have also opened up an office in China, for example.

Are any fresh orders in the pipeline?

Well, we have received orders worth about Rs 20,000 crore in the first half of this fiscal. The significant part is that we have received almost 70% orders from the private sector. Most of these private customers, who were earlier patronising Chinese equipment, have been coming back to us.

Do you have any plans to collaborate with foreign companies to manufacture power transmission equipment?

In the transmission segment we are the leaders up to 400 kw. In transformers our market share has been above 50%. Now the market is moving towards higher voltage class equipment. Here, we don?t have readily qualified products for the market .We have been trying to develop this product. We have developed some equipment like gas insulator switchgears. Transformer is also on the way. Since the market has come up much earlier than we thought it would, we are trying to have relationship with a few international companies to have technology tie-ups and therefore get qualified for marketing these products in India.

What is the progress of talks on entering into a joint venture with Indian railways for setting up a coach factory?

We have given a proposal to railways. The railway minister announced in her budget speech that she will set up a coach factory in Kanchrapara. We are already producing electrics for railways. So, it is only the coach, which has to be manufactured. Therefore we wanted to join them. They have responded positively to that.

What would be the structure of the joint venture?

It may not be necessarily a 50:50 JV. The details are still to be still worked out.

Do you have any plans of capacity augmentation in the power plant equipment business?

We are expanding from 10,000 mw to 15,000 mw by December 2009 and also 20,000 mw by December 2011. We have already put the plans in place and are going ahead full steam.

What kind of orders are you expecting this fiscal?

We are expecting a repeat performance of the last year, particularly since the orders will start coming for the 12th Plan for capacity addition targets. They will start happening from this year onwards. So, last year we had an order booking of roughly about Rs 44,000 crore in the equipment segment and this financial year we are expecting a similar performance.

What about your presence in the solar energy?

We have been in this field for almost 30 years. Initially, we set up a capacity of 250-kw, which we scaled up to 1 mw, and then to 2 mw. This September we inaugurated a facility of 8-mw. In addition, we also signed an MoU with BEL. BHEL and BEL entered this technology at the same time. So, we are looking at a major facility to be set up in this segment, which is vertically integrated. It could be next year because we are working on it.

What about your presence in nuclear power generation in the country?

We have a share of about 70-80% market in the existing nuclear plants in India. We have signed an MoU with Nuclear Power Corporation of India to set up a joint venture for producing power plant equipment for nuclear power plants and we are discussing with various multinational companies for technology for turbo generator sets for the existing reactor technology in India. Further, we have also signed MoUs with companies like GE-Hitachi. Our plans are totally in line with the plans of Nuclear Power Corporation of India. We go jointly on this.