BHEL adopts a two-pronged strategy of focusing on EPC

Company is exploring 'collaboration opportunities' in certain foreign countries to bolster export business

To address tough business conditions and pricing pressures, state-owned BHEL is focusing on EPC business besides working on ways to reduce overall costs.

Elaborating on the company's growth strategies, BHEL Chairman and Managing Director B Prasada Rao informed shareholders that "collaboration opportunities" are being explored in certain foreign countries to bolster export business.

"To address prevailing pricing pressures, BHEL is focusing on all-round cost reduction measures in different areas of operations through competitive buying, supply risk mitigation, IT application, operations improvement, and better employee productivity," he said.

Given the current business environment, especially in the power sector, Rao said the company has adopted a two-pronged strategy of focusing on EPC (Engineering, Procurement and Construction) business as well as enlarging its offerings.

The company is expanding its portfolio by adding Flue- Gas Desulphurisation (FGD), Water Management systems, Air Cooled Condenser, and other Balance of Plant (BoP) systems.

"Certain ongoing projects have got impacted as the Indian power sector continues to be besieged with issues relating to fund constraints, land acquisition, clearances and coal linkages.

"These testing times in recent few years have given BHEL the opportunity to consolidate its strengths, identify areas for future growth...," Rao said addressing shareholders' at the annual general meeting here.

Amid challenging business conditions, Bharat Heavy Electricals Ltd (BHEL) saw its net profit nearly half to Rs 3,461 crore in the last fiscal.

In 2013-14, the company's outstanding order book was worth Rs 1,01,500 crore.

To increase revenues from industry segment, BHEL has initiated steps such as expanding presence in transportation (rail), solar and transmission business areas.

For business diversification, BHEL is pursuing capacity expansion (locos) and product development (765 & 1200 kV transformer), among others.

With regard to overseas avenues, the company would be looking to forge "opportunity-specific and market specific alliances to strengthen its presence as an EPC contractor in the international market.

For 2013-14 period, the company has declared a total dividend of Rs 693 crore.

"... As the economy is expected to move at pre-recession levels in near term, the capital expenditure cycle could kick off in a big way in the next few quarters. This will improve business environment and BHEL will benefit from emerging opportunities," Rao noted.