BHEL profit up 40%, looks for gas turbine business in Japan

Government-owned power equipment manufacturer Bharat Heavy Electricals Ltd (BHEL) on Monday announced a 40 per cent rise in net profit to Rs 6,021 crore in 2010-11. The company said it was looking at the Japanese market for gas turbine business in partnership with American major GE.

Announcing the results, BHEL's Chairman and Managing Director B Prasada Rao said localisation of technologies, continuous working on supply chain and lower material costs helped the company in posting good profit. In the 2009-10, the company made a profit of Rs 4,311 crore.

Rao said change in the company's accounting policy on provision for warranty obligation for construction contracts pushed revenues and profits. "This (change in accounting policy) has resulted in an increase in turnover by Rs 2,456 crore and increase in profit before tax at Rs 414 crore," he said.

BHEL has earmarked a capital expenditure amount of Rs 1,700 crore for the current financial year. "We are exploring opportunities in that country (in Japan) with our joint venture partner GE for setting gas turbine projects, as they have a smaller gestation period," he said.

The company secured record orders worth Rs 60,507 crore in 2010-11 taking the figure for total orders in hand to Rs 1,64,130 crore. Of this, overseas order accounted for Rs 3,738 crore from 24 countries. “In international business, the outlook remains cautious and the recovery after the global meltdown has not been able to create a positive environment… Recent developments in the Arab world have also adversely affected business prospects in BHEL’s traditional markets,” he said.

Rao said most of the projects in West Asia were in final stages of implementation.

"As far as new projects are concerned, there might be some delay as there are no activity as of now," he noted. Business from the region accounts for less than 1 per cent of the firm's total revenues.