The Hon'ble Prime Minister of India Shri Narendra Modi ji while giving the clarioncall to create a New India' said "There are 125 Crore people and if each onetakes one step then the country would be 125 Crore steps ahead". These words capturethe essence of the fervour of 125 Crore Indians joining hands together to create aNew India'. This is a journey and your company envisions playing a significant rolein this journey.
40000 employees of your company have together embarked on this journey and see it asan opportunity to create a new BHEL which is more responsive to the environment has newsources of strength and has new streams of growth that make the company sustainablyrising. Our persistent efforts in this journey enabled us to deliver both on growth andprofitability in yet another year of challenging business environment. Going forward ourresolute focus will remain on managing the current momentum as well as on buildingcapabilities for charting a higher growth path.
2017 also marks the 25th year of BHEL being a public listed company. Thishas been a very rewarding journey for the shareholders. On behalf of BHEL let me firstexpress profound gratitude to you our shareholders for continuously reposing faith inBHEL.
The year that was
Now let us look at some of the achievements of your company in the year 2016-17:
BHEL recorded a turnover of H 28840 Crore a growth of 10.7% over the previousyearafter reversing the declining trend of the last three years. The company alsoreturned to profitability with a Profit Before Tax (PBT) of
H 628 Crore compared to a loss of H 1164 Crore (IND-AS restated) in the last fiscal.Net Profit (PAT) stood at
H 496 Crore against a net loss of H 710 Crore (IND-AS restated) in the previous year.
is a journey
BHEL envisions playing a significantrole
40000 employees of your company
see it as an opportunity to create a newBHEL
Your company contributed 45274 MW of power generation capacity during the 12thFive Year Plan
(2012-17) surpassing the government's target for BHEL by 9% strongly complemented byour sustained focus on expeditious project execution.
8570 MW of power generating equipment was commissioned/synchronised during theyear. With this the worldwide installed base of power generating equipment supplied byBHEL has exceeded 178 GW.
BHEL secured the largest ever export order on EPC basis the H 10000 Crore for settingup the 2x660 MW Maitree Thermal Power Plant (TPP) in Bangladesh a result of ourpersistent efforts towards globalization.
Your company booked orders worth H 23489 Crore during the year. This includes amajor order from Power
Grid Corp. of India Ltd. for 800 kV 6000 MW HVDC terminals associated with the HVDCBipole link between the western and southern grid of India 18x145 MW
Palamuru Rangareddy Lift Irrigation Scheme stages 2&3 from Govt. ofTelanganahaving the largest rating of pump motor sets ordered for supply in Indiaand
57.6 MLD ultrafiltration water package order from
NTECL Vallur TPS.
With the highest total SPV power plant orders won during the year for 131 MWyour company's total solar portfolio now exceeds 370 MW.
Despite security concerns and immense logistic barriers BHEL successfully commissionedall the three units of the prestigious 3x14 MW Salma hydropower project (Afghan IndiaFriendship Dam) in Afghanistan.
With the commencement of commercial operation of the 2x800 MW Yeramarus TPS ofRPCL a joint venture of KPCL BHEL and IFCI your company has forayed into powergeneration now.
With 76/62 mm Super Rapid Gun Mount (SRGM) and Auxiliary Control System (ACS)commissioned on INS
Chennai all the three ships of Kolkata-class stealth guided missile destroyers of theIndian Navy are now equipped with BHEL manufactured SRGM and ACS.
BHEL is developing the first Advanced Ultra Super critical (AUSC) technology for higherefficiency thermal power plants jointly with NTPC and IGCAR under the aegis of Governmentof India.
Your company invested 2.75% of its turnover on R&D and the total intellectualcapital of the company has enhanced to 3915 patents and copyrights.
With an objective of expanding our value chain in the solar power your company hasexpanded the manufacturing capacity of solar cells to 105 MW and of solar modules to 226MW per annum.
Your company would be paying a total dividend of 79% for the year 2016-17 thatincludes a final dividend of
39% subject to approval by the shareholders.
The Board of Directors of your company has also recommended issue of bonus shares inthe ratio of
1 bonus share for every 2 existing shares.
The road ahead
Forces of change like climate change technology disruptions fragile geopoliticsnewer regulations suboptimal investment from private sector and changing energy-mix areleading to emergence of newer challenges for your company. Initiatives-ever overseascontract valued over taken by the government such as Ujwal DISCOM Assurance Yojana (UDAY)Goods and Services Tax (GST) push to
Make-in-India' and visibility in resolution of stranded projects are veryencouraging for sustained growth of the economy.
For sustaining momentum of growth and profitability
focusing on expeditiousexecution of orders and implementing structural changes
All the same we continue to march forward with zeal in our journey of CreatingBHEL of tomorrow' a BHEL that is Responsive Robust and Rising'to the needs of its stakeholders. We have already taken some important steps in thisjourney and have resolved ourselves for many more with focus on maintaining the currentmomentum of profitability protecting the core business while building new capabilitiesand diversifying by harnessing the emerging opportunities.
Creating BHEL of Tomorrow: Sustaining momentum of growth
For sustaining momentum of growth and profitability the company is focusing onexpeditious execution of orders and implementing structural changes for making yourcompany agile:
Efforts are being made to convert stranded/slow-moving orders into executableones. Around H 12000 Crore of non-executable orders have been made executable during theyear.
We have created customer focused business groups for nuclear hydro defence& aerospace and transportation for strengthening diversification efforts.
We have also consolidated various structures to increase organizational agility.Further initiatives will entail consolidation of smaller and consistently under-performingbusinesses and establishments.
A dedicated Project Closure Synergy Group' has been created to ensureearly closure of project sites optimize manpower utilization resolving outstandingissues with various stakeholders and realizing cash.
We have revised various company policies with focus on simplification anddecentralization to eliminate low-value added activities and multiplicity of works.
Creating BHEL of Tomorrow: Growth in medium term
The key to growth in medium term is to protect leadership in the core businessreorient people strategy and harness digital technologies for higher value proposition:
key to growth in medium term is to protect leadership in the core businessreorient people strategy and harness digital technologies
We are asserting leadership in the core business by enhancing value propositionin the existing portfolio. Developing new products and services such as emission controlequipment lift irrigation systems enhanced offerings for nuclear power and expandingspares and services business are complementing the efforts to expand our core business.Foray into power generation as a co-developer of 2x800 MW Yeramarus
TPS is one of the strategies for capturing more business in the power value chain.
We have taken various initiatives in response to changing demography ofemployees and the business mix which comprehensively cover all aspects of peopledevelopment. Initiatives towards employee engagement and development in your company havebeen recognized in the business world by being adjudged as one of the Top 25 BestCompanies to Work for' in India by the prestigious Business Today magazineBHEL isthe only PSU to figure in this distinguished list.
Corporate Digital Transformation' group has been formed for developingcapabilities in diagnostics and predictive maintenance services as a business opportunityand enhance productivity of our operations.
Creating BHEL of Tomorrow: Foundation for long-term sustenance
The foundation for long-term sustenance rests on strengthening the capabilities toinnovate and on bringing more diversity in turnover both in business-mix andgeographical-mix:
foundation for long-term sustenance rests on strengthening the capabilities toinnovate and on bringing more diversity in turnover
We continue to invest more than 2.5% of turnover on
R&D and innovation. Current focus areas include the development of Advanced UltraSupercritical (AUSC) technology which will reinforce your company's leadership towardssupply of cleaner thermal power in the country passive solar trackers 1200 kV UHVACtransformers and reactors and IGBT propulsion technology for ACEMU and DEMU.
We are building a more diversified portfolio capitalizingonemergingopportunitiesinsolarpowertransportation defence aerospace and water businessto increase the share of business from non-coal areas. Continuing with the strategy ofbuilding capacity and capability through in-house resources and collaboration with globaltechnology leaders we have recently entered into a technology collaboration agreementwith Kawasaki Heavy Industries Ltd. Japan for the manufacture of stainless steel coachesand bogies for Metro Rail.
Export strategies are being aligned with global dynamics with focus on market expansionand market penetration. Execution of 2x660 MW Maitree TPP in Bangladesh the firstoverseas power project of this rating and exacting parameters will open a stream of newopportunities in export markets.
The journey continues
Finally I would like to express my sincere gratitude to all our stakeholders: businesspartners including customers and vendors for showing faith in us employees for theirpassion and commitment members of the Board for their wisdom members of the ManagementCommittee for efficiently managing the company's resources and operations and aboveallyou our shareholders for evincing trust in our ability to steer forward BHEL inthese challenging times. Various ministries of Government of India particularly the
Department of Heavy Industry have been providing valuable guidance and support to ourefforts. Thank you all for your continued support that I greatly appreciate and cherish.Your company has invested more than 50 years in the nation building endeavours. Thecurrent movement towards building a New India' also offers us encouraging prospects.Team BHEL believes that we have the technology strength manufacturing prowess committedmanpower and innovation ecosystem to contribute in this movement.
With renewed vigour great confidence and relentless determination we look forward toan exciting future ahead.
Chairman & Managing Director
August 10 2017