BHEL Bhopal unit waits for projects to revive

In a presentation to local industrialists in 2013 on the power equipment sector, SR Prasad, then the executive director of Bharat Heavy Electricals' Bhopal unit, had sounded worried. He said his company was looking at new areas like nuclear power, transportation and defence to meet upcoming challenges and retain its Maharatna status.

Prasad retired this year, but his fears were well founded. The unit's profit has declined from Rs 689 crore in 2012-13 to Rs 264 in 2014-15. Rising inflation and costly labour are a hindrance as BHEL struggles for business from exhausted project developers.

Scams during the previous United Progressive Alliance regime and land and environmental issues have held up projects across the country and turnover at BHEL's Bhopal unit has slipped from Rs 4,800 crore in 2011-12 to Rs 3,678 crore in 2014-15.

Established in 1964, the unit manufactures hydro-turbines, transformers, electric motors and switchgears.

"There was a plan to set up a nuclear turbine manufacturing unit through a tripartite agreement among BHEL, a central government-owned power entity and a private player. No private partner came forward although BHEL has enough capital and land to set up the plant," a company executive said.

BHEL planned to make 750 MW nuclear fuel-fed power turbines and had a good opportunity of acquiring technology from Alstom and Nuclear Power Corporation, but the venture did not materialise.

MV Yugandhar, the current executive director of the unit, did not respond to queries but a company spokesperson admitted, "Conditions are not favourable but the unit is comfortable with Rs 1,000-1,500 crore orders for hydro-turbines and Rs 1,000-1,200 crore annual orders each for transformers and switchgears for the next three years. Other units also have a combined order book of Rs 1,000-1,500 crore for three years."

For now, the unit's main business is the 1,000 MW Punatsangchhu project in Bhutan and a 4,000 MW project in Telangana.

Some orders have not materialised though. "A manufacturing unit at Bhilwara in Rajasthan was expected to fetch Rs 800 crore business each year, but it did not come up. Similarly, a 4,000 MW solar power project in Rajasthan failed to take off. BHEL expected to supply controls for this plant," a source said.

The MP government has shelved the Rewa and Dada Dhuniwale thermal power projects. Three other projects in the state to be developed by National Thermal Power Corporation are awaiting coal linkage for five years. The 400 MW Shree Maheshwar hydel power project faced controversy and did not fructify. BHEL was expecting big business from each of these.

"BHEL used to supply motors to Indian Railways at Rs 30 lakh per unit. Later it slashed its price to Rs 22 lakh but private players quoted a price of Rs 16 lakh for the same motors," said a source. Competition has kept on chipping away at business in BHEL's Bhopal unit.

"If policy issues are not addressed, the unit will end up with a Rs 3,500 crore turnover this year against the targeted Rs 5,003 crore," a company source said.