Lok Sabha Question No. 3847 (UNSTARRED), answered on 2015-12-22
Subject: BHEL
Ministry: HEAVY INDUSTRIES AND PUBLIC ENTERPRISES
Asked by: RAJESH KUMAR DIWAKAR

## GOVERNMENT OF INDIA MINISTRY OF HEAVY INDUSTRIES AND PUBLIC ENTERPRISES DEPARTMENT OF HEAVY INDUSTRY

## LOK SABHA UNSTARRED QUESTION NO. 3847 TO BE ANSWERED ON 22.12.2015

## BHEL

## 3847. SHRI RAJESH KUMAR DIWAKER:

Will the Minister of HEAVY INDUSTRIES AND PUBLIC ENTERPRISES be pleased to state:

- (a) whether the Government had given extension to the Chairman and Managing Director of Bharat Heavy  Electricals  Ltd.  (BHEL)  with  a  goal  to  improve  the  financial  performance  of  the undertaking in the part and if so, the details thereof;
- (b)  whether  the  financial  performance  of  BHEL  during  the  last  two  year  quarter  is  far  from satisfactory; and
- (c) if so, the action taken by the Government against the erring officials for poor performance of BHEL?

## ANSWER

## MINISTER  OF  STATE IN THE MINISTRY OF  HEAVY INDUSTRIES AND PUBLIC ENTERPRISES  (SHRI  G.M. SIDDESHWARA)

- (a):  The  Chairman and Managing Director (CMD) of Bharat Heavy Electricals Limited (BHEL) was  granted  an  extension  for  a  period  of  2  years  beyond  the  date  of  his  superannuation  on 31.12.2013, as a special case, with the approval of the Competent Authority.  this was done have keeping  in  view  the  difficult  situation  confronting  the  power  sector  as  a  whole  and  BHEL  in particular  at  that  time  in  the  face  of  adverse  economic  situation,  resulting  in  inadequate  order booking; need to undertake accelerated diversification strategy in both core and non-core business, which entailed the need for continuity in top leadership at a crucial juncture.
- (b) & (c):  The financial performance of BHEL has come down since 2013-14 against the backdrop of  adverse  business  conditions  on  account  of  various  external  factors  beyond  the  control  of  the Company, such as :
-  contraction  in  new  addressable  opportunities/  orders  maturing  in  the  domestic  power  sector market  due  to  issues/  bottle-necks  related  to  non-availability/  acquisition/  lack  of  enabling requirements such as land, coal/fuel linkages, environmental clearances etc. ;
-  orders getting deferred or being put on hold due to customer issues ;
-  weak investment sentiments and financing constraints from the lending institutions ;
-  customers constraints in releasing payments curtailing progress of some of the power projects ;
-  lack  of  level  playing  field  including  infrastructure  bottlenecks  suffered  by  the  domestic industry vis-à-vis foreign suppliers/ manufacturers ;
-  global slowdown, political turmoil, armed conflict in countries like Syria & Yemen, resulting in lower demand for exports etc.

In order to overcome the situation of a shrinking market, BHEL crafted strategies, which include :

-  Expanding the offerings and provide total EPC solutions to customers ;
-  Offering  Fuel-flexible  Boilers  capable  of  firing  both  imported  &  indigenous  coals  (in  wide range of combinations) ;
-  Leveraging enhanced manufacturing prowess (20,000 MW of power equipment p.a.) to shorten deliveries ;
-  Work on techno-commercial optimization ;
-  Intensify  Diversification  efforts  in  areas  like  Defence,  Transportation,  Transmission  and Renewable Energy segments

Despite the unfavourable externalities, BHEL, by expanding its offerings, secured 89% of its total orders in Power Sector on Engineering, Procurement & Construction (EPC) basis during 2014-15 and  also  maintained  72%  market  share  for  two  consecutive  years.  In  this  regard,  the  orders received during the year 2014-15 increased by around 10% to Rs. 30,814 Crore as compared to 2013-14.  Further,  during  the  current  year  i.e.  2015-16  (upto  November  2015),  orders  valued  at approx. Rs. 27,400 Crore have already been booked with persistent efforts by the Company, which is  about  80% higher than the corresponding figure for the same period during the previous  year (i.e. April to November 2014).

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