India can do without low grade Chinese equipment - BHEL

With the government admitting the Eleventh Plan power generation target won’t be met, the country’s biggest manufacturer of power equipment Bharat Heavy Electricals Ltd has invited criticism.

Outgoing CMD Mr K RAVI KUMAR in an interview defended the company and lambasted Chinese suppliers for poor quality.

Q. What has been your experience as chairman, especially since BHEL has faced criticism for the shortfall in power generation targets?

A - Today three out of four companies are lifting equipment from BHEL. 75% of the power generated in the country comes from sets manufactured by BHEL. We have made a great contribution to the country not only in power generation and transmission but also in areas like transportation. Besides sub critical, we are also doing supercritical and advanced class gas turbines. Any set is judged by its efficiency and the auxiliary power consumption.
In terms of technical parameters, our bids are the best in the world.

Of course, there are problems in managing growth. We are growing at 30% per annum. Second, people must realize this sector has not been very good in the Eighth and the Ninth Plan. Growth has been very good for all power sector companies for the last seven to eight years, but you cannot ramp up capacity in a day. Even brownfield expansion takes a minimum of three years.

We wanted to double the capacity from 10,000 MW to 15,000 MW and further to 20,000 MW. We are already reaching 15,000 MW and we have placed orders for reaching 20,000 Mw. These machines are imported from Italy, Germany and Japan. Manufacturing of equipment does not cost much, compared to the turnover that you get. Today, for us to increase capacity from 10,000 MW to 20,000 MW it costs around INR 4,200 crore, whereas we are expecting a turnover of close to INR 30,000 crore this year.

A lot of time was wasted initially in thinking whether this capacity will be actually used or there will be a dip in demand. But I was clear that this (new planned capacity) could be written off in five years. We have tied up all the technologies, including with Siemens and Alstom for supercritical technology. So, one is organic expansion, second is technology tie ups and the third important thing is supply chain management. We had difficulties in procuring castings and forgings, but now we are thinking of an agreement with Sheffield in UK for this.

Q. Are joint ventures and tie-ups the way forward for BHEL?

A - Technology transfers are the first choice for us. If not, then joint ventures and tie-ups.

Q. You have a current order book of Rs 130,000 crore, a huge number. Does it act as a dampener for new orders, as new clients will worry that the delays, which you’re known for, will get worse?

A - The first 10 months of any order is only engineering. Our deliveries are 40-42 months, typically. So, the execution capability is also there. But you have to manage growth, which is not easy with the talent crunch. This quarter, we have grown at 25%. Managing \growth is a big issue and is a great challenge for the company.

(Sourced from www.steelguru.com)

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