Investor Presentation
May 2016
Disclaimer
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Table of Contents
1. BHEL: Overview
1
2. Investment Highlights
7
3. Financial Profile
20
4. Key Risks
23
Appendix
25
A. Business Strategy
26
B. Others
31
1. BHEL: Overview
India’s Flagship Engineering & Manufacturing Company
Rich
Heritage
Indian
Engineering &
Manufacturing
Giant
•
•
•
A ‘Maharatna’ company
Over 50 years of experience
Government of India (GoI) shareholding of 63.06% (1)
•
Integrated power plant equipment manufacturer with capability to deliver 20,000
MW of power plant equipment per annum
Catering to all fuel types viz. Coal, Hydro, Nuclear, Gas & Solar with entire range
Serving core sectors of industry viz. Power, Transmission, Industrials Systems and
Products, Transportation (Railway), Renewable Energy, Oil & Gas, and Defence
•
•
Pan India
Presence
•
•
•
17 manufacturing units + 2 repair units + 8 service centres
Infrastructure to deal with 150+ project sites (across India and abroad)
1 Subsidiary + 6 Joint Ventures
Global
Footprint
•
•
•
References in 78 countries
About 15,000 MW contracted
Executing 22 projects in 14 Countries
Rich
Experience
•
•
•
•
170+ GW capacity installed globally
30,000+ AC machines supplied
360+ Electric Locos supplied to Indian Railways & Other Industries
500,000+ MVA transmission equipment supplied
•
•
•
One of the highest R&D Expenditure In Indian Engineering Field (>2.5% of
Turnover)
Filing patent / copyright applications regularly
42000+ employees(2) including 77% Executives with Engineering background
•
•
•
Consistent dividend paying company for over thirty years(3)
FY16 Revenue(4): US$ 4.02 bn
Debt to Equity ratio: 0.01 (FY15)
Innovation
Strong
Financials
Source: BSE, Company data and Stock exchange filings. FX: INR/US$: 66.
Note: (1) Shareholding as on March 2016. (2) As on Mar 31, 2016 (3) FY1976 – 77 onwards. (4) Total Revenue BHEL Standalone FY16.
1
Pan India Presence
BHEL’s Operational Footprint in India
Business Offices
1
Bangalore
2
Bhubaneswar
3
4
4
6
3
A
5
11
A
D
12
8
9
G
15
8 15 H
5
E
6
3
9
B B
7
13
2
C
C
11
1
Chennai
Guwahati
6
Ranchi
7
Jabalpur
8
10
14
Chandigarh
5
Service Centres
Manufacturing Units
Jaipur
5
15
2
Bangalore
3
Bhopal
4
Goindwal
6
Haridwar
7
Hyderabad
8
Jagdishpur
Jhansi
9
Kolkata
9
10
Lucknow
10
Ranipet
11
Mumbai
11
Rudrapur
12
New Delhi
Raipur
13
Tiruchirappalli
13
14
Secunderabad
16
Thirumayam
15
Vadodara
17
Visakhapatnam
12
A
Chandigarh
B
Kolkata
C
Nagpur
D
Noida
E
Patna
F
Secunderabad
G
Vadodara
H
Varanasi
17
14
F 7
1
1
14
2
10 D
A
Noida (Northern Region)
B
Kolkata (Eastern Region)
C
Nagpur (Western Region)
D
Chennai (Southern Region)
4
12 13
16
Source: Company data and Stock exchange filings.
Note: Map not marked to scale.
2
Regional Offices (Power Sector)
Subsidiaries—Bhel Electrical Machines LTD.,
Kasaragod, Kerala
Corporate Office New Delhi
Corporate R&D Hyderabad
Single Source with Multiple Solutions for Infrastructure & Industrial Segments
Power
•
•
•
Transmission
Contributes to
approximately 80% of
the total revenues
•
Proven capabilities to
execute thermal power
projects on EPC basis
•
170 GW+(1) installed
base of power plant
equipment globally
•
Products:
•
•
•
•
Major orders received
from MPPTCL, NTPC,
TANTRANSCO, BIDCO,
Discoms, etc
Products:
Gas: Advanced class
gas turbines up to 289
MW (ISO) for open and
combined cycle.
Hydro: EM Package up
to 250 MW
Nuclear: TG sets
220/235/500/540/700
MW
•
Present in UHV, EHV,
HVDC and GIS
segments
Thermal: Entire range
up to 800 MW ratings
including supercritical
sets of 660/ 700/ 800
MW
•
Power Transformers
•
Instrument Transformers
•
Shunt Reactors
•
Switchgears
•
Capacitors
•
Control & Protection
Equipments
•
•
Source: Company data and filings.
Notes: (1) As of March 31, 2016
3
Offers wide range of
transmission systems
and products
Transportation
•
•
Offers system range
including traction
machines, Electric
Locomotive (AC/DC),
Diesel Electric Shunting
Locos, EMU Coaches
and traction drive
systems
BHELs’ IGBT propulsion
equipment accounts for
majority share of IGBT
based locomotives in
Indian Railways
> 70% of Indian
Railways equipped with
traction equipment built
by BHEL
Products:
•
Locos and EMU
HVDC terminals
•
Flexible AC
Transmission
Electric Rolling Stock –
AC & DC
•
Electrics for Urban
Transportation System
Non Conventional
Energy Source
•
Industrial Products
& Systems
•
•
Offers EPC solutions
from concept to
commissioning for PV
Power Plants
Contributing strategic
equipments to Indian
defence forces for over
20 years
Designs, manufactures
and services various
types of onshore rigs
since 1975
•
•
Capability to
manufacture space
grade solar panels and
space grade batteries
Consortium with
Hindustan Shipyard and
Midhani for Indigenous
Submarine Project
Capability to
manufacture onshore
deep drilling rigs up to a
depth of 9,000 meters
Products:
•
86+ oil drilling rigs
supplied
Solar PV:
•
Defence
Water Management:
•
Super Rapid Gun Mount
•
•
IPMS for Naval Ships
•
Turret Casting for T72
Tanks
•
Equipments for naval
ships
•
Compact HE for LCA
Offers turnkey solutions
for industrial and power
plant water systems
Products:
•
Solar cells and modules
•
500 kVA Power Control
Unit (PCU) for Solar PV
Plants
Products:
•
Oil Rigs
•
Well Head & Xmas
Trees
•
Fabricated Equipments
& Boiler Feed Pumps
•
Compressors
•
AC Machines
•
Valves
One of the Only Seven “Maharatna” CPSEs
Top Shareholders other than GoI (31/03/16) Key Facts(1)
Shareholding Pattern
(as on March 31, 2016)
Insurance
& Mutual
funds,
13.15%
Financial
Institutions
& Banks,
5.25%
Shareholder
Public,
3.18%
Others,
1.41%
President
of India,
63.06%
LIC
% Shareholding
Listed on BSE on 12th July 1998
Listed on NSE on 12th September 1998
14.49%
ICICI Prudential
1.42%
Comgest
1.30%
Magallen
1.10%
Share Price (52Wk High / Low):
INR 289.85/ INR 90.40
No. of Shares:
2,447 mn
FY14 Dividend / Share:
INR 2.83
FIIs,
13.94%
Market Cap:
US$ 4.7 bn
Upgraded from “Navratna(2)” Status to “Maharatna(2)” Status in February 2013
1997
2013

One of the first nine “Navratna” companies in India

Empowered to take investment decisions, including the power to
make equity investments in joint ventures, wholly owned subsidiaries
and to undertake mergers and acquisitions on its own, subject to a
ceiling of the lower of 15% of the Issuer’s net worth and US$167mn
for any one project, and subject to an overall ceiling of 30%

Consistent performance in a highly competitive environment enabled
BHEL to attain the coveted “Maharatna” status in 2013

Empowered to take investment decisions, including the power to make
equity investments in joint ventures, wholly owned subsidiaries and to
undertake mergers and acquisitions on its own, subject to a ceiling of
the lower of 15% of the Issuer’s net worth and US$832mn for any one
project, and subject to an overall ceiling of 30%
Source: BSE, Company data and Stock exchange filings. FX: INR/US$: 66.
Note: (1) Market Data as on May 12, 2016.
(2) Exclusive scheme of GoI to grant enhanced powers to the board of profit making CPSEs. Subject to fulfilling qualifying requirements.
4
2. Investment Highlights
Investment Highlights
6
1
India has Strong Fundamental Drivers for Power Capex Recovery
2
‘Make in India’ Initiative to Provide Significant Stimulus to BHEL
3
BHEL Well-Positioned to Capture Opportunities in its Core and Emerging
Business Segments
4
Gradually Improving Order Book
5
Continuous Focus on R&D and Upgradation of Technology Through Collaboration
6
Quality Performance Standards of BHEL Sets
7
Long Standing Relationship with Sector Leaders (both Government and Privately
owned)
8
Strong Management and Government of India Support
1
India has Strong Fundamental Drivers for Power Capex Recovery
India to Become one of the Fastest Growing Economies
India has a Low Per Capita Consumption(1)
(Real GDP)
(kWh / Year)
6.9%
7.3%
7.6%
13,246
7.6%
10,712
5.1%
5,472
3,045
3,298
2,438
957
FY13
FY14
FY15
FY16
2017E
US
Australia
UK
World
China
Brazil
India
India requires 500+ GW(4) of incremental generation
capacity by 2032 to sustain 8% GDP growth
All India installed capacity (GW) (2)
(as on March 31st ,2016)
3,880
Thermal capacity
Nuclear
210.67
5.78
Hydro
42.78
Renewable energy sources (3)
42.84
Total Installed Capacity (GW)
302.08
778
2,886
2,118
575
1,524
425
966
306
243
FY14A
FY17E
Generation Capacity (GW)
FY22E
FY27E
FY32E
Electricity Generation (bln Kwh)
Notes:(1) World Bank indicator EG.USE.ELEC.KH.PC (web site) except India data for 2010 and India’s data as on 31.03.2014. (2) CEA, All India capacity revised estimate as on March 2016
(3) RES include SHP, BP, U&I, Solar and Wind Energy (4) Incremental generation capacity calculated from January 31, 2015.
7
2
‘Make in India’ Initiative to Provide Significant Stimulus to BHEL
Priority Sectors…
Strong Focus on Manufacturing…
 25 sectors identified to develop manufacturing
capabilities
 Vision of increase in manufacturing sector
growth to 12-14% per annum over the medium
term
 Thermal Power, Electrical Machinery,
Railways, Defence Manufacturing and
Renewable Energy amongst the key selected
sectors
 Reduce reliance on imports for key sectors like
defence and manufacturing equipments
– Aim to reduced imports in defence sector by
30% in next 5 years
 Emphasis on providing scarce raw materials,
high-end technology and skilled manpower to
help domestic companies
FDI Policy Measures…
Increasing Exports…
Technology Upgradation…
 Hike in FDI limits to increase investments
 Focus on standards, services sector and
enhancing product competitiveness in the global
market
 Increase in domestic value addition and
technological depth in manufacturing
– Defence: FDI increased from 26% to 49%
under government approval route
– Railways: Construction, operation and
maintenance of specified activities opened to
100% FDI under automatic route
Source: Make in India website (http://makeinindia.com).
8
 Aim to increase manufacturing share in the
country’s GDP from 16% in FY14 to 25% in
FY22
Efforts to Reduce Imports…
 Incremental exports of ~US$100 - US$200 bn
from electrical machinery, auto components,
autos, leather products, textiles etc.
 Technological investments
 Information Technology to make governance
more efficient and effective
3
Significant Growth Expected in All Business Verticals
Power
 Thermal: Accounts for 70% of total power capacity and continues to be largest contributor
Generation Capacity Addition(1)
to new capacity addition
(GW)
– 5 new UMPPs under “Plug and Play” scheme through tariff-based competitive
bidding
88.5
93.4
2012-17
2017-22
 Hydro: 148 GW of potential in Hydro sector of only 42.7 GW has been realized till FY16(2)
 Nuclear: From current nuclear capacity of 4,780 MW, GoI targets to increase it to
20,000 MW by 2020 and 63,000 MW by 2032(3)
 Implications for BHEL: Being the market leader, stands to benefit from new capacity
additions
Transmission
T&D Equipment Industry(6)
 Thrust on Smart Grid – 100 Smart Cities Planned and Green Energy Corridor
(US$ bn)
$70.0
 HVDC Equipment Demand Envisaged in XIII plan-15000 MW(4)
 9 new projects UHCTC proposed up to 2030 to cater to 199 GW RE power generation(5)
$17.2
 Implications for BHEL: Positive & first mover advantage in UHV & HVDC Systems
FY13
Transportation
FY22
Plan Outlay for Railways (7)
 US$142 bn to be invested in next five years across network decongestion/expansion
(45%), signaling (15%), locomotive, station redevelopment & high speed railways(8)
(US$ bn)
$18.3
 9 high – speed rail corridors to be developed and 6,000 km route to be electrified(7)
 High HP Diesel / Electric Locos etc. for Dedicated Freight Corridor (DFC)
 Implications for BHEL: Established relationship with Railways and strong
manufacturing base
$5.8
$2.6
FY05
Sources: (1) WG report on Power Sector. (2) CEA. (3) Nuclear Power Corporation of India Limited. (4) CEA. (5) PGCIL. (6) Indian Electrical Equipment Industry Mission Plan
(7) CMIE. (8) Railway Budget, Ministry of Railways.
9 Notes: FX: INR/US$: 66.
FY10
FY17 BE
2012 – 2022.
3
Significant Growth Expected in All Business Verticals
Non Conventional
Energy Source
Current gap between installed
capacity and estimated potential(1)
 GoI plans to scale up solar power to a cumulative 100 GW by 2022, increase from
JN National Solar Mission target of 20,000 MW by 2022(1)
(Solar Power) (GW)
100
 Government emphasis on Water and Waste Water Segments
 Implications for BHEL: Well poised to capture the unique and growing opportunity
3
Dec-14
Defence
FY22
Defence expenditure in India(4)
(US$ bn)
 US$38 bn allocated in the budget for defence spending in FY17
(2)
 Offset policy: 30% for procurement of defence equipment in excess of US$50
bn(3)
$31
$33
$34
FY14
FY15
FY16
$38
 Implications for BHEL: Established manufacturing base and long relationship
with defence establishments
Industrial Products
& Systems
 Upstream:
– 60% of the prognosticated reserves of 28,000 MMT are yet to be harnessed(5)
– India to add 91 mn barrels to crude oil capacity to protect from supply disruptions
by 2017(6)
 Midstream: Increase in India’s refining capacity to 307.6 MMTPA by 2017(7)
 Downstream: Proposed National Gas Grid of 15,000
Primary Energy Demand(9)
(MTOE)
1,516
563
km(8)
 Implications for BHEL: Positive with revival of Industrial Capex
10
FY17 BE
FY12
FY35
Sources: (1) Union Budget 2015 -16. (2) CMIE (3) Defence Procurement Procedure 2013. (4) CMIE (5) Make in India website (http://makeinindia.com). (6) Ministry of Petroleum and Natural Gas.
(7) Make in India website (http://makeinindia.com). (8) Budget 2014 – 15, Ministry of Finance. (9) IEA World Energy Outlook.
Notes: FX: INR/US$: 66.
Market Leader with Sustained Growth
Turnover-BHEL standalone
FY86
FY91
FY96
Order Book
Order Book
(MW)
(US$ bn)
6,112
4,689
4,247
2,839
Economy
Slowdown
962
732
262
FY81
478
119
63
FY76
90’s
Post liberalization
Pressures
1,566
80’s
Onslaught of
competition
through ICBs
(WB/ADB/OECF)
6,566
2000’s
Economy on
higher growth
path
+
Chinese
competition
7,600
Turnover (US$ mn)
70’s
Almost a
protected
market
Economic
slowdown
2010’s
Emergence of
high domestic
competition
4,028
4
FY01
FY06
FY11
FY16
Retained Leadership in Shrinking &
Competitive Market(1)
(Power Sector) (US$ bn)
9,782
9,627
$9.9
6,470
$6.6
5,256
3,934
$4.8
$3.3
FY12
FY13
FY14
FY15
FY16
FY12
$4.2
68%
FY13
FY14
FY15
Source: Company data and Stock exchange filings. FX: INR/US$: 66.
Notes: (1)Represents Power Sector orders.
(2) Due to the bulk tender from NTPC & DVC, maximum market share of BHEL was pre – decided in FY12
72%
72%
74%
$7.5
(2)
48%
$5.1
$3.7
(Total Orders outstanding as on 31.03.2016: 16, 777 mn$)
11
67%
61%
$4.7
$10.0
$4.7
$3.6
FY16
FY10
FY11
FY12
FY13
Total Market (US$ bn)
FY14
FY15
FY16
BHEL's Market Share (%)
5
Continuous Focus on R&D
High Spend on R&D
(US$ mn)
Recent Product Development
•
Developing India’s first coal fired Advanced Ultra Supercritical (AUSC)
power plant technology with NTPC and IGCAR
•
Super critical boiler with an ability to switch 100% indigenous / imported coal
•
Indigenously developed and commercialised Gas Insulated Switchgear
(GIS) up to 400 kV
•
765 & 1200 KV UHVAC Transformer, Reactor developed.
•
Transportation- Insulated-Gate Bipolar Transistor (IGBT) propulsion
technology developed for Loco & ACEMU
•
Sole supplier in world for 420 kN/320 kN porcelain insulators for ±800 kV
HVDC lines
•
Commissioning of 400kV Phase Shifting Transformers at Kothagudam
•
STATCOM: Developed for Industrial and Grid Application
•
500 KW PCU for solar power generation
$190
$182
$169
2.8%
$154
$135
3.30%
3.35%
2.5%
2.4%
FY12
FY13
FY14
R&D Expenditure (US$ mn)
FY15
FY16
% of Turnover
Turnover from In – House Development
Filing of Patents and Copy Rights
(Total Filings: 3441)
(US$ mn)
$1,490
$1,461
$1,229
19.9%
FY12
19.2%
20.1%
$1,106
$1,012
23.70%
25.10%
FY13
FY14
FY15
Turnover from In-house Development (US$ mn)
Source: Company data and Stock exchange filings. FX: INR/US$: 66.
12
FY16
% of Turnover
351
FY12
434
453
FY14
FY15
477
385
FY13
FY16
5
Technology – Acquiring “Know – How” and “Know – Why” Capabilities
Building Indigenous Technology Capabilities
• Started with technology support from Global OEMs and
developed indigenous capabilities
Ongoing Partnerships with Leading Technology
Partners
Mitsubishi Heavy Industries,
Japan
Pumps, Flue Gas
Desulphurization (FGD) system
• Better understanding of Indian coals
Alstom,
France
Once through Boilers
• New developments in recent years:
General Electric,
United States of America
Gas turbines
Siemens,
Germany
Steam Turbines, TG,
Axial/lateral condensers
– IGBT based technology in Transportation segment
Oto Melara,
Italy
76 mm SRGMs
– Nuclear sets of 240 MWe, 540 MWe, 700 MWe
Sheffield Forge – Masters,
United Kingdom
Forgings
Metso,
Finland
C&I Automation platform
Nuovo Pignone,
Italy
Centrifugal Compressors
Vogt Power International,
United States of America
HRSG
General Electric Industrial,
India
Water Treatment Equipment
TLT GmbH,
Germany
Fans
• Capability to design product to customer specs
– Introduction of 100 MW, 150 – 250 MW, 270 MW, 300 MW,
525 MW, 600 MW, 660 MW, 700 MW, and 800 MW sets
– IGCC development
– 765 & 1200 kV UHVAC Transformer and Reactors
• Offering Fuel Flexible supercritical boilers (Indian/ Imported Coal)
• Currently developing India's first coal fired Adv. Ultra Supercritical
(AUSC) power plant technology with IGCAR & NTPC
Source: Company data and Stock exchange filings.
13
6
BHEL Makes Electric Utilities Installations Across India Covering Entire Range & Type
Coal, Gas, Nuclear, Diesel and Hydro Projects
Share of India’s Installed
Generation Capacity(1)
Share of Generation
(Thermal)(2)
(As on March 31, 2016)
(During FY 2015-16)
Jammu and Kashmir
Himachal Pradesh
Punjab
55%
BHEL
Uttarakhand
Haryana
Arunachal Pradesh
Sikkim
Delhi
Uttar Pradesh
Rajasthan
Others
45%
BHEL
58.5%
Others
41.5%
Assam
Nagaland
Bihar
Meghalaya
Manipur
Tripura
Gujarat
Mizoram
Jharkhand
Madhya Pradesh
Chhatisgarh
West Bengal
Key Achievements in FY16
BHEL’s Electric Utility
Installed Base in India
Orissa
Maharashtra
Telangana
(As on March 31, 2016)
MW
Andhra Pradesh
Goa
Coal
Karnataka
Gas and CCP
1,14,215
7,560
Tamil Nadu
Diesel
Kerala
Legends
14
Hydro
Gas and CCP
Diesel
 19 Sets registered PLF over 90 % & 60 Sets between 80-90 %
Coal
Nuclear
Source: Company data and Stock exchange filings.
Note: Map not marked to scale.
1) Coal, Gas & CCP, Diesel, Nuclear & Hydro. (2) Coal & Lignite.
199
Nuclear
3,340
Hydro
20,039
Total
145,354
 161 nos. Sets achieved Operating Availabilty (O.A.) higher than 90
%
 185 nos. Thermal Sets clocked uninterrupted operation of more
than 90 days
 02 Sets - uninterrupted operation of more than 300 days
 16 Sets - uninterrupted operation of 200- 300 days
7
Long Standing Relationships with Sector Leaders
Power Sector
 National Thermal Power Corporation (NTPC)
Industry Sector
 GAIL (India) Ltd.
 National Hydro Power Corporation Ltd.
 Nuclear Power Corporation of India Ltd.
(NPCIL)
 Karnataka Power Corporation Ltd. (KPCL)
Bhutan
 Hindalco Industries
 Indian Oil Corporation Ltd. (IOCL)
 National Aluminium Company Ltd. (NALCO)
 Lalitpur Power Generation Company Limited
(LPGCL)
 NTPC Ltd.
 Tata Power Company Ltd.
 Oil & Natural Gas Corporation Ltd. (ONGC)
 Rajasthan Rajya Vidyut Utpadan Nigam Ltd.
(RRVUNL)
 Oil India Ltd. (OIL)
 RattanIndia Power Ltd.
 Power Grid Corporation of India Ltd. (PGCIL)
 Singareni Collieries Company Ltd. (SCCL)
 Tamil Nadu Generation and Distribution
Corporation Ltd. (TANGEDCO)
 Maharashtra State Power Generation Company
 Telangana Power Generation Corporation Ltd.
(TSGENCO)
Source: Company data. Major customers in recent past.
15
General Electricity Company of
Libya (GECOL)
Oman
Petroleum Development Oman
(PDO)
Rwanda
Minister of Infrastructure
(MININFRA)
Nigeria
Government of Cross River
State
Senegal
Compagnie d’Electricite due
Senegal
 Rashtriya Ispat Nigam Ltd. (RINL)
 Sesa Sterlite Ltd (a Vedanta Group company)
Punatsangchhu Hydroelectric
Project Authority
Mangdechhu Hydroelectric
Project Authority (MHPA)
Libya
 Indian Railways
 Andhra Pradesh Power Generation Corporation
(APGENCO)
 Orissa Power Generation Corporation Ltd.
(OPGC)
International Operations
Yemen
Public Electricity Corporation,
Ministry of Electricity & Energy
7
Global Presence
References in 78 countries across all six continents of the world and Offices in 6 countries
 First large turnkey project export by
Indian co. – Libya (1977)
 About 15,000 MW contracted
 Orders contracted in last 10 years over
Rs. 16,500 Crs
 Executing 22 projects in 14 Countries
 BHEL’s major contributions –
– Bhutan (4356 MW/ 95%)
– Rwanda (28 MW/ 25%)
– Oman (1327 MW/ 11%)
– Libya (1176 MW/ 11%)
Source: Company data and Stock exchange filings.
Note: Map not marked to scale.
16
8
Strong Management and Government of India Support
Best in Class Management Team in Place
Atul Sobti
Chairman & MD
Additional charge as Director (Power)
Strong GoI Support
• Government of India owns 63.06% (1) stake in BHEL
• 2 Government nominee directors
• Significant and consistent contribution to exchequer (US$ mn) (2)
$977
D. Bandyopadhyay
Director (HR)
$994
$858
$717
Amitabh Mathur
Director (Industrial Systems & Products)
$371
FY11
S. Biswas
Director (Engineering, Research &
Development)
FY12
FY13
FY14
FY15
Awarded ‘Maharatna’ Status in 2013
Numerous Awards & Recognition
T. Chockalingam
Director (Finance)
17
Source: Company data. FX: INR/US$: 66.
Note: (1) As on March 2016.
(2) Includes all direct taxes and dividends.
“Maharatna”
status
2013
Outstanding
PSU of the
Year
2013
Golden
Peacock
Award
2013
PSE
Excellence
Award
2014
India’s Top PSU
Award in the
Heavy
Engineering
sector by Dun &
Bradstreet
8
Board of Directors
 The composition of Board of Directors of BHEL has an appropriate mix of Executive
Directors represented by Functional Directors including CMD and Non-Executive
Directors represented by Government Nominees & Independent Directors, to maintain
the independence of the Board and to separate the Board functions of management
and control.
 The total number of Directors sanctioned for BHEL Board is 16 represented by 6
Functional Directors (incl. CMD), 2 Govt. nominees and 8 Independent Directors.
 Presently, there are 3 vacancies of Independent Directors and 1 vacancy of Functional
Director, which are under consideration of DHI, GoI.
 There is a woman director on the Board of BHEL as required under the provisions of
Companies Act & Listing Regulations.
18
8
Corporate Governance Compliances
 Code of Business Conduct & Ethics for Board Members and Senior Management
Personnel – in place
 Board level periodic reviews of compliance reports for all laws applicable to BHEL
 Vigil mechanism in place to report genuine concerns of Directors & Employees
 All the requisite Board level committees are functional in BHEL with the composition in
line with the requirements of Companies Act, Listing Regulations & SEBI Guidelines
 Code of Conduct in place for regulating & reporting trading by Insiders & Fair
disclosure in compliance with SEBI guidelines on the matter
 Risk Management Committee in place to review the Risk governance structure, risk
assessment & management frame work, guidelines, policies & processes for risk
assessment & management
19
3. Financial Profile
Financial Performance
Total Revenues(1)
EBITDA and EBITDA Margin(2)
(US$ mn)
(US$ mn)
$7,327
23%
$7,412
$6,445
23%
22%
$1,701
$1,608
16%
11%
-2%
$5,995
$4,665
$1,465
$3,993
$939
$509
FY11
FY11
FY12
FY13
FY14
FY15
Net Income
(US$ mn)
(US$ mn)
$1,579
FY13
$1,074
$1,014
FY14
FY15
FY16
FY16
EBIT(3)
$1,382
FY12
($72)
$1,463
$917
$790
$531
$345
$220
($215)
FY11
FY12
FY13
FY14
FY15
FY16
Source: Company data and Stock exchange filings. Financials are on consolidated basis. FX: INR/US$: 66.
Notes: (1) Total Revenues = Net Revenue from Operations + Other Operational Income.
(2) EBITDA = Profit before charging Interest cost, Tax & Depreciation.
21
(3) EBIT = Profit before charging Interest cost & Tax.
($136)
FY11
FY12
FY13
FY14
FY15
FY16
Strong Balance Sheet
Total Equity
Working Capital(1)
(US$ mn)
(US$ mn)
$5,024
$5,183
$5,026
Trade Receivables
$4,626
$3,849
$3,484
$3,054
$4,498
$4,771
Inventories
Trade Payables
$4420
$4,173
$3,843
$1,486
$1,532
$1,463
$2,049
$1,798
$4,020
$4,450
$4,273
$4,018
$3,751
($1,571)
($1,478)
($1,338)
($1,377)
($1,371)
FY12
FY13
FY14
FY15
FY16
$1,652
$3,068
($1,237)
FY11
FY12
FY13
FY14
FY15
FY16
FY11
Dividend Paid (2)
Capex(2)
(US$ mn)
(US$ mn)
$231
$251
$237
$200
$170
$105
$114
$86
$82
$59
$43
$15
FY11
FY12
FY13
FY14
FY15
FY16
FY11
Source: Company data and Stock exchange filings. Financials are on consolidated basis. . FX: INR/US$: 66.
FY12
FY13
22 Note: (1) Working Capital calculated as Inventories + Trade Receivables – Trade Payables (2) Capex & Dividend paid on BHEL Standalone basis.
FY14
FY15
FY16
4. Key Risks
Key Risks
• Delayed Resolution of Issues Plaguing Large Infrastructure Projects including Power Sector in India
• High Working Capital requirement
• Excess Domestic Manufacturing Capacities
• Low Projects Finalization
• Political Disturbances in Target Export Countries
24
Appendix
A. Business Strategy
Power Sector: Business Strategy and Initiatives
Strategy
Select Initiatives
 Enhancing EPC business
 Enlarging scope of offer: Flue-Gas Desulfurization (FGD), Air Cooled Condenser etc.
Thermal (Coal)
• Increase contribution
 Indigenizing Supercritical Technology
• Business Expansion
 Developing Adv. Ultra Supercritical technology
• Enhance
Competitiveness
 Introduction of Fuel-Flexible Boilers
 Exploiting full potential in Spares & Services area
 Technology development of major BoP Systems
Hydro
• Portfolio Expansion
• R&M
• Indigenization
Nuclear
Gas
Source: Company data.
27
• Entry into Core
Nuclear area
• Consolidating
Strengths
 Single window services for Hydro R&M
 Graduated to 250 MW sets, plans to further increase to 300 MW
 Capabilities up to 700 MWe conventional island
 SG- BHEL’s in-house design, thermo-dynamic analysis & manufacturing capability
 Subdued business due to lack of sufficient domestic gas
 Focus on Services
Industry Sector: Business Strategy and Initiatives
Strategy
Transmission
Transportation
Solar
• Product Development
• Execution Experience
Defence
Source: Company data.
28
 Executing ± 800 kV, 6000 MW UHVDC multi-terminal transmission system of PGCIL in
consortium with ABB
 Power across 1,700 kms (North East to Agra)
 Highest ever converter capacity
 Indigenously developed 1200 kV class Transformer & 765 kV Transformers & Reactors.
• Capacity & Capability
Enhancement
 Collaboration with global OEMs for business opportunities in ‘Metro’ segment and HighSpeed Train sets
 State-of-the-art IGBT based propulsion system developed in association with Strukton,
Netherlands for 6000HP AC Loco and 1600 HP AC EMU
• Capacity Expansion
 Expansion of existing Manufacturing Facility in Bangalore to meet immediate business
opportunities
 8 MW of Cells to 100 MW of Cells & 26 MW of Modules to 226 MW of Modules
 Enhancing EPC capability to 600 MW
• Expanding Footprints
Water
Select Initiatives
• Consolidating
Capabilities
• Product Development
• Strategic partnerships
with Defence PSUs &
global OEMs
 Agreement with GE India Industrial Private Limited for membrane based water treatment
equipment
 Ability to provide cost-effective membrane-based water treatment systems to industries
 Nominated as production agency for 127 mm Medium Calibre Gun & 30 mm Naval Gun
 200kW HT Super conducting motor for propulsion systems
 BHEL is also addressing lower rating Gas Turbines for marine applications
Continually Improving Project Execution
Strategies and Initiatives
Projects Execution Performance
Cycle Time Reduction
Commissioning/Synchronization (MW)
• Increased focus on project specific value chain alignment
15,059
13,452
• ‘Online Project Engineering Documentation Manager’ for
expeditious drawings / documents processing
11,941
• Focus on intermediate milestones of project execution
• Proactive actions for ODC movement / clearances
10,340
9,270
Site Capability Enhancement
• Empowerment of site managers for faster decision making
• Heavy duty cranes: 52 nos., Strand Jacks: 2 nos., Induction
Heating Machines: 217 nos. deployed additionally during last five
years
Skill Enhancement
• 693 man days training for E&C of supercritical sets
• Leveraging Welding Research Institute Trichy to train high
pressure welders
• Extensive training to act Apprentices & customers
• Skill enhancement of site working engineers by introducing
system of training at door step
Source: Company data.
29
FY12
FY13
FY14
FY15
FY16
B. Others
JVs and Subsidiaries
Government of India (“GoI”)
Public
63.06%
36.94%
Bharat Heavy Electricals Limited
Subsidiaries
51%
Joint Ventures
50%(1)
BHEL GE Gas Turbine
Services Pvt. Ltd.
50%
NTPC – BHEL Power Projects
Pvt. Ltd. (NBPPL)
26%
Raichur Power
Corporation Limited
50%
Dada Dhuniwale Khandwa
Power Limited
50%(1)
Power Plant Performance
Improvement Limited
BHEL Electrical
Machines Limited
50%(1)
Source: Company data.
Note: (1) One share less than 50%.
31
Latur Power Company Limited
Organization Structure
Board of Directors
Chairman and Managing Director
Management
Committee
Corporate Functions
Business Sectors
Director
Eng. / R&D
Operating Units
HEP, Bhopal
TP, Jhansi
Director
HR
Director
Power
HPEP, Hyderabad
Director
Finance
Chief Vigilance Officer
HPBP & SSTP, Trichy
IVP, Goindwal
Director
Industrial Systems &
Products
Corporate Planning &
Development
Corporate Quality
HEEP & CFFP, Haridwar
BAP, Ranipet
EDN & ESD, Bangalore
CBU Bangalore
• EPD Bangalore
• IP, Jagdishpur
International Operations
PPPU, Thirumayam
PC, Chennai
HPVP, Vishakhapatnam
Company Secretary
Source: Company data.
32
CSU, Jagdishpur
CFP, Rudrapur
Glossary
Term
Description
Term
Description
AC
Alternate Current
EPC
Engineering, Procurement and Construction
ACEMU
Alternate Current Electric Multiple Unit
EPD
Electro Porcelains Division
AUSC
Advanced Ultra Supercritical
ESP
Electrostatic Precipitator
BAP
Boiler Auxiliaries Plant
FDI
Foreign Direct Investment
BIDCO
Bajaj Infrastructure Development Company Limited
GDP
Gross Domestic Product
BoP
Balance of Plant
GIS
Gas-insulated Switchgear
C&I
Control & Instrumentation
HEEP
Heavy Electricals Equipment Plant
CBU
Ceramic Business Unit
HEP
Heavy Electrical Plant
CEA
Central Electricity Authority
HPBP
High Pressure Boiler Plant
CFFP
Central Foundry & Forge Plant
CFP
Component Fabrication Plant
HPV
Heavy Plates & Vessels
CPP
Captive Power Plants
HVDC
High Voltage Direct Current
CPSE
Central Public Sector Enterprises
IGBT
Insulated Gate Bipolar Transistor
CSU
Centralized Stamping Unit
IGCAR
Indira Gandhi Centre for Atomic Research
DC
Direct Current
IP
Insulator Plant
DVC
Damodar Valley Corporation
IPMS
Integrated Platform Management Systems
E&C
Erection & Commissioning
ISO
International Organization for Standardization
EDN
Electronics Division
IVP
Industrial Valves Plant
EHV
Extra High Voltage
KPCL
Karnataka Power Corporation Limited
EMU
Electric Multiple Unit
MPPTCL
Madhya Pradesh Power Transmission Corporation Limited
33
Glossary (Contd.)
Term
Description
Term
Description
NPCIL
Nuclear Power Corporation of India Limited
TPP
Thermal Power Plant
NTPC
National Thermal Power Corporation
TPS
Thermal Power Station
OEM
Original Equipment Manufacturer
TSGENCO
Telangana State Power Generation Corporation Limited
PGCIL
Power Grid Corporation of India Limited
UHCTC
Ultra High Capacity Transmission Corridor
PMG
Project Management Group
UHV
Ultra High Voltage
PPPU
Power Plant Piping Unit
UHVAC
Ultra High Voltage Alternating Current
PSU
Public Sector Undertaking
UHVDC
Ultra High Voltage Direct Current
PV
Photo Voltaic
UMPP
Ultra Mega Power Projects
R&D
Research and Development
R&M
Renovation & Modernization
SPV
Solar Photovoltaic
SSBG
Spares and Services Business Group
SSTP
Seamless Steel Tube Plant
TANGEDCO
Tamil Nadu Generation and Distribution Corporation Limited
TANTRANSCO
Tamil Nadu Transmission Corporation
34