Lack of import duty gives China advantage over BHEL

China will be the biggest threat to Bharat Heavy Electricals Limited (BHEL) in the years to come if the Union government does not take immediate steps to impose an import duty, a top BHEL executive said here.

The official said that the Chinese firms that have a cost advantage would enjoy more business share in the future. He added that the tardy process of project clearance was making it tougher for the company to do business. “Not only Chinese but local power equipment companies are also posing challenges. The Union government has cleared less number of projects this year vis-à-vis last year, thereby BHEL is facing tough challenge,” said S S Gupta, executive director, BHEL on Thursday while highlighting performance and achievements of mother unit of BHEL in Bhopal during 2011-12.

He said, “We want a level playing field. We pay 12 per cent excise, five per cent custom duty and two per cent central sales tax and four per cent value added tax while Chinese companies pay no tax and can sell their products at least 21 per cent cheaper. Besides, their government offers other sops too. If the Union government does not impose an import duty on Chinese or other outside companies, BHEL would face stiff competition.”

He said, “The Union government has a slow process of clearing various power projects. If they have to maintain a growth above nine per cent, power sector needs a boost. The dependency on coal-based thermal power is over now, India needs to look at nuclear power. BHEL will soon set up a nuclear turbine block in Bhopal.”

Bhopal unit has achieved a turnover of Rs 4780 crore, up 19 per cent of targeted Rs 4,778 crore.

The unit also earned profit (before tax) of Rs 801 crore, up 15 per cent over the previous year’s profit. On the export front, the unit registered a growth of 19 per cent over the previous year and total turnover in exports have gone up to Rs 1,637 crore. “We have set a target of Rs 6,003 crore but it will be a challenging task considering the present business prospects in the power sector.”

Controversial firm’s equipment supply on hold

BHEL has put the equipment supply of controversial Maheshwar power project on hold saying the promoter company, S Kumar’s, has not made payments. “We have to recover nearly Rs 60 crore from them,” S S Gupta, executive director of BHEL Bhopal unit said. He added the company had rescheduled 1,320 Mw Malwa Thermal power project equipment supply to July 2013 after a meeting with senior state government officials.