In the wake of lower utilisation of its manufacturing facilities, state-run Bharat Heavy Electricals (Bhel) called for expression of interest (EoI) from foreign companies, who wish to use its currently idle factories for manufacturing from India. The possible areas where Bhel is looking for the partnership include the manufacturing of electrical equipment, transportation equipment, solar modules, lithium-ion cells and LCD panels, sources aware of the development said.
The company is also offering its 14,000-acre land bank available in major cities, industrial clusters and demand centres for a range of purposes like setting up manufacturing facilities, hospitals and smart cities. Bhel has 16 manufacturing facilities across the country. Calling it a “win-win situation” for both the foreign company and Bhel, analysts pointed that both parties can benefit from the state-owned manufacturer offering a readymade solution in the form of factories, its 34,000 staff (including 9,000 engineers) and its pre-set vendor base and supply chain.
“The partnership can shorten the time to set up a manufacturing facility for the incoming partner while also helping Bhel utilise its idle factories and employees,” Emkay Global Financial Services commented on this development. Bhel’s initiative to expedite its business diversification comes at a time when it is receiving lesser orders from the power sector — its main client base — with the slowing pace of capacity addition of thermal power plants in the country.
With power demand slowing down, Bhel wants to utilise the opportunity emerging from the coronavirus aftermath, where global firms are seen to adopt the strategy to decentralise manufacturing to mitigate disruption risks associated with concentrated and localised operations, a company official said requesting anonymity.
At the end of Q3FY20, Bhel’s order book declined 8% y-o-y to Rs 1.1 lakh crore. Due to the lockdown to contain the outspread of the coronavirus, some large orders, which Bhel was looking forward to have, also been postponed.
