FACE TO FACE ? 1: SETTING UP ANOTHER BHEL WILL NOT BE AN EASY TASK: CMD

Apr 01, 2008 (Asia Pulse Data Source via COMTEX) -- -- State-run Bharat Heavy Electricals Ltd, which enjoys a near monopoly in the domestic power equipment market, does not see any threat to its position from entry of overseas as well as local players. BHEL CMD K Ravi Kumar feels it would be a real challenging task to create another such company, which specialises in providing total solutions to the customers under one roof. Also, the firm, which was been held responsible for missing the 10th plan five year target, is taking i Free Report!The Only 3 Options Strategies You'll Ever Need

Initiatives to ensure timely delivery during five years to 2012.

Following are the excerpts from an interview with Kumar:

PTI: The government is pushing for a new BHEL with NTPC. Do you agree to the move?

Kumar: We are the only integrated manufacturers in the country, perhaps one of the few in the world. We manufacture every thing S under one umbrella. We give total solutions to the customers. Siemens manufactures only turbo generators, GE manufactures Turbines. You can be a product leader or a cost leader like Chinese. GE, Siemens are product leaders. They spend lot of time on R&D and they make the best product. They don?t give total solutions. We are not product leaders or we are not cost leaders also. But we provide total solutions under one roof. So if somebody has to establish a company of our size it will be very very difficult. I am not saying it is impossible. The way the demand is going up, definitely there is a scope for others to come in. But to be a competitor to BHEL, I am not skeptical, to establish a company of our size is not going to be easy.

PTI: How much investment would be required to set up a company of your size?

Kumar: We have already achieved 10,000 MW of capacity. We are planning 15,000 MW by 2009-end. We are planning 20,000 MW by 2012. If you really want to manufactures products under one roof, it will be very difficult.

PTI: Would not there be a competition from L&T-MHI?

Kumar: They are planning to manufacture super-critical boilers and turbines. They are entering, we are already in.

PTI: BHEL has been held responsible for slippages in 10th five year plan targets.

Kumar: I should not be complacent. Out of 42,000 MW we got (orders for) approximately 20,000 MW. We got only 50 per cent of what they had planned. We have already 80 per cent of what was ordered in 10th plan. BHEL has done well. Out of 40,000, they could place orders for only 30,000 MW. There were lot of delays in placing orders. Manufacturing is not a problem today. Today there is a problem of supply chain management.

PTI: Have you set for yourself any targets for the 11th five year plan?

Kumar: We suppose to supply about 60 per cent of the targeted capacity addition. The government plans to add 78,000 power generation capacity in the 11th five year plan. Another 10,000 MW would come from captive power plants. I feel the plan is for a lakh megawatt. Ultra mega power projects would also be there.

PTI: What is the update on acquisition of Bharat Heavy Plate and Vessels with BHEL?

Kumar: We will be taking it over in the first half of the next fiscal. The plan is to take BHPV a long way. We have worked out the details. We are negotiating with the government and the financial details can not be disclosed. BHEL is taking a 100 per cent share in BHPV. It will become a subsidiary of the company. It will not be merged with BHEL, it will be a subsidiary. But if we take over, we would like to invest about Rs 500 crore.

PTI: Where will the manufacturing joint venture with NTPC be located?

Kumar: If its focus is on exports, it will be located near ports. If not, it will be located somewhere else.

PTI: What is your present order book position?

Kumar: We are not short of orders. Our order book is Rs 82,000 crore now. What we should do is to improve the supply chain management and on-time delivery. That can be improved by Advance Manufacturing Action, which means we will start manufacturing equipment even before receipt of orders. We have taken up with the government that they should standardise the equipment.

PTI: What would be the capacity of the joint venture with NTPC?

Kumar: It should be at least 3,000 MW, the investment for which depends on how NTPC responds. We have chosen the name and formed a shell company. It will be a separate company, which will be managed by NTPC and BHEL. Both the companies will appoint two directors each on the joint venture?s board.

PTI: Is the competition from international companies a blessing in disguise in a sense that your burden was reduced to some extent?

Kumar: We thought the 40 per cent market share, which is not with us, should go to an Indian manufacturer. This is why we are going for another company in joint venture with NTPC. We are not afraid of competition. The joint venture will complement BHEL in certain areas.

PTI: Are you still looking for acquisitions or tie-ups?

Kumar: We would be looking for equity participation in power projects. We held talks with four producers, two have been successful. We have already signed up with state utility of Tamil Nadu and expect to close a deal soon with Gujarat. We are also in talks with the Uttar Pradesh utility.


Ref:
http://www.tradingmarkets.com/.site/news/Stock%20News/1292478/