Bharat Heavy Electricals Ltd

Last modified by Asif Farooqui on 2021/03/22 16:36

Overview

Established in 1964, Bharat Heavy Electricals Ltd (NSE:BHEL) is one of India’s largest engineering and manufacturing enterprises in the energy and infrastructure sectors and a leading power equipment manufacturer globally.¹

BHEL serves the core sectors of the economy and provides a comprehensive portfolio of products, systems and services to customers in power, transmission, transportation, renevyables, water, defence & aerospace, oil & gas and industry from its widespread network of 1 6 manufacturing plants, 2 repair units, 4 regional offices, 8 service centres, 1 5 regional marketing centres, 3 overseas offices and more than 150 project sites across India and abroad. In all, BHEL has footprints in 83 countries in all the six inhabited continents.

The worldwide installed base of power generating equipment supplied by BHEL exceeds 185 GW- making it the undisputed leader amongst Indian power plant equipment manufacturers. BHEL has installed more than utility sets in thermal, hydro, nuclear & gas based power plants, contributing 53% to the total installed conventional power generation capacity in the country.

All the entities of the company are accredited to ISO 9001 :2015, Quality Management Systems, with major manufacturing units also accredited to Environmental Management Systems, ISO 14001:2015, and Occupational Health & Safety Management Systems, OHSAS 18cm:2007.

Power

The power generation segment comprises thermal, gas, hydro and nuclear power plant businesses. BHEL has been in this business for almost five decades, having commissioned its first coal-based set in 1969. The company has proven turnkey capabilities for executing power projects from concept to commissioning. BHEL offers a wide variety of coal-based sets of up to 1 ,000 MW rating, including 660/700/800 MW rating sets based on supercritical technology and sub-critical sets of up to 600 MW unit rating. The company also offers state-of-the-art emission control equipment for coal- based plants for lower carbon footprint and compliance with the revised emission norms notified by the Government of India. BHEL sets are customised for Indian conditions and fully comply with the technical standards notified by the Central Electricity Authority (CEA).

Additionally, the company supplies co-generation and combined cycle plants with higher plant efficiencies. BHEL also manufactures Circulating Fluidized Bed Combustion (CFBC) boilers that efficiently utilise the low calorific lignite available in India and has commissioned power projects based on CFBC technology up to 250 MW rating.

The company manufactures a wide range of products for nuclear reactors viz. steam generators, reactor headers & end shields, besides nuclear turbine-generator sets ranging from 220 MThe company to 700 MThe company ratings. Customised hydro sets from 5 MW to 300 MW of Francis, Pelton and Kaplan types for different head-discharge combinations, are also engineered and manufactured by BHEL. The company manufactures advanced- class large size gas turbines and matching generators.

BHEL has proven expertise in plant performance improvement through renovation, modernisation and uprating of a variety of power plant equipment.

Transmission

BHEL is a leader in the field of power transmission in India with a wide range of transmission systems and products and a proven track record across the globe. BHEL undertakes turnkey transmission projects from concept to commissioning on EPC basis which includes execution of EHV & UHV substations/switchyards, both AIS and GIS types ranging from 33 kV to 765 kV, HVDC converter stations (up to ± 800 kV), and reactive power compensation schemes.

The company has executed a number of High Voltage Direct Current (HVDC) projects in India, notably the world's largest ±800 kV, 6Cm MW Ultra High-Voltage Multi-terminal DC transmission link between North Eastern part of India and Agra (Uttar Pradesh). BHEL is also currently executing +800 kV, 6000 MW, Raigarh-Pugalur HVDC project, which is another milestone project in HVDC segment.

The products manufactured by BHEL include power transformers up to 1200 kV, HVDC converter transformers up to 800 kV, current transformers up to 400 kV, capacitive voltage transformers up to 1200 kV,dry type transformers, shunt reactors up to 765 kV, power capacitors, vacuum and SF6 switchgears, gas insulated switchgear up to 400 kV,control and relay panels, SCADA, IEC 61850 based Substation Automation System, thyristor valves and controls for HVDC application, ceramic and composite insulators, FACTS devices (FSC, SVC, Thyristor Controlled Shunt Reactor (CSR)) for dynamic reactive power management of long transmission lines.

BHEL has indigenously developed India's first 400 kV Phase Shifting Transformer (PST) and commissioned it at Kothagudem power plant in Telangana. The PST contributes towards improving the transmission efficiency and also averts grid collapse in case of system instability.

Transportation

BHEL is a leading supplier of electrical propulsion systems and traction equipment for all types of rolling stock to Indian Railways, which operates one of the world's largest railway networks. India's first fully air-conditioned AC EMU is equipped with BHEL- supplied IGBT based propulsion equipment. The company also manufactures complete electric locomotives (up to 6000 HP) & EMU coaches for Indian Railways. BHEL manufactures diesel electric locomotives (up to 3000 HP) catering to the shunting requirements of various industries and power utilities.

BHEL has also diversified into the area of track maintenance machines and coach manufacturing for Metros & Indian Railways.

Oil & Gas

BHEL supplies complete onshore drilling rigs capable of drilling up to 9,000 M, with AC-SCR system or AC drives incorporating the latest state-of-the-art technology, mobile rigs, work-over rigs and sub-sea wellheads. BHEL also supplies onshore drilling rig equipment like draw works, rotary-table, travelling block, swivel, mast and substructure, mud systems and rig electrics to leading oil and natural gas exploration companies of India.

Wellheads and X-Mas tree valves up to 10,000 Psi rating onshore as well as offshore applications are also provided by BHEL to drilling companies. The company has also supplied casing support systems, mudline suspension systems and block valves for offshore application.

Renewables

With a current portfolio of more than 465 MW in the field of photovoltaics, BHEL has generated expertise in critical parts of the silicon value chain, viz., processing of silicon wafer to cell, processing of cell to PV module and in design, supply, installation, commissioning and O&M of grid interactive utility, rooftop solar, canal top and floating solar PV power plants. Thus, offering turnkey solutions for solar PV plants. BHEL has a dedicated R&D group in the area of semiconductor materials, nano and thin film devices. ISRO has partnered with BHEL for space-grade solar panels and satellite batteries.

Water Business

BHEL Offers complete Water Management Solutions including Desalination Plants, Water Treatment Plants (WTP), Effluent Treatment Plants (ETP), Sewage Treatment Plants (STP), Tertiary Treatment Plants (TTP) and Zero Liquid Discharge (ZLD) System for power plants, industries and municipal applications. The company set up its first Sea Water Reverse Osmosis (SWRO) plant in 1999.

Defence and Aerospace

BHEL has emerged as a reliable supplier of equipment and services to Indian defence forces for more than two decades with dedicated engineering and manufacturing facilities. Major products include super rapid gun mount, strategic naval equipment, integrated platform management systems, thermo- pressed components, turret castings for T72 tanks, simulators, castings and forgings, etc.

BHEL has been a reliable supplier to ISRO for solar panels and batteries for their satellites. BHEL is one of the few firms worldwide with capability to design and manufacture heat exchangers for military aircraft and is supplying heat exchangers for 'TEJAS'. BHEL is rapidly expanding its offering in the aerospace segment.

e-Mobility & Energy Storage Solutions

BHEL is committed to nation's e-Mobility mission in a significant way. BHEL had manufactured and supplied more than 300 Battery Powered Road Vehicles in the past. Presently it is geared up to provide end-to-end integrated e-mobility solutions for cities. BHEL is focusing on a diversified portfolio consisting of traction motors and controls, Lithium ion battery packs and charging infrastructure.

BHEL has a state-of-the-art facility for packaging and testing of Li-ion batteries for space applications. The company has assembled, tested and supplied more than 70 batteries of 45 Ah - 180 Ah to ISRO for use in its satellites during the last 15 years.

BHEL is also capable of delivering complete grid storage solutions with in-house developed Power Conditioning System and SCADA.

International business

BHEL has established itself as a global player with footprints in 82 countries across the globe. Starting its journey with the first export order for Malaysia in the early seventies, the company has been expanding its references year by year. These references encompass complete power projects on EPC basis (thermal, hydro, gas), substation & rehabilitation projects, along with a wide gamut of products including turbines, generators, boilers, DG sets, control equipment, transformers, capacitors, bushings, insulators, switchgears, solar modules, motors, wellheads, castings, valves, locomotives, etc. The company has also been providing after-sales support to its overseas customers in the form of spares and services. The cumulative installed capacity of power plants overseas with BHEL-supplied equipment stands at close to 11 GW.

Industry Overview

World economic growth slowed to 2.9% in 2019 against 3.6% in 2018 as per IMF. World economic activity has suffered severely due to the onset of the COVID-19 pandemic, with widespread disruptions in supply chain, production and trade. Even with the anticipation of a gradual recovery in the second half of 2020, world economic growth in 2020 is projected to contract. High frequency indicators like industrial production point to synchronized, deep supply side downturn. Consumption and service output has dropped due to lockdowns, unemployment, income losses, and weaker consumer confidence. ²

The Indian economy clocked a GDP growth of 4.2% in 2019-20 against 6.1% during the previous year. High frequency indicators indicate a decline in industrial production activity and also consumption demand beginning Mar’20 across both urban and rural segments. Electricity consumption fell during lockdown period to recover later as lockdown was eased, and production of capital goods, consumer durables and non-durables contracted.

In the domestic power sector, the push to reform distribution and retail side of electricity value chain continued with recent draft amendments in Electricity Act, and the ₹ 90000 cr financial package extended to discoms. In thermal power business, although ordering for new coal-based power generation equipment continued to be weak, demand for emission control business remained strong. The year also saw business activity from nuclear power sector.

Power Sector

In 2019-20, after years of average annual electricity generation growth rate of 5-6%, the electricity generation almost stagnated, with an annual growth rate of ~1%. Notably, the generation from thermal power projects declined by 2.75%. However, the government has provided impetus to restart the growth cycle of the infrastructure sector including the power sector. To achieve the goal of GDP of $5 trillion by 2024-25, India needs to spend about $1.5 trillion (₹ 111 lakh crore) on infrastructure. To achieve this objective, the National Infrastructure Pipeline (NIP) report for FY 2020-25 was prepared, with Energy Sector (i.e. Power, RES, Atomic Energy and Petroleum & Natural Gas) being allocated 24% of the total investment plan.

Over the past few years, the Power Sector has been dealing with various issues like fuel supply, delays in clearances and issues related to land acquisition, tying up of funds, and securing power off-take agreements with DISCOMs. The Government has undertaken a slew of reforms to resolve these issues, one of which is a new plan to lend ₹ 90,000 Crore to the DISCOMs, in a phased and performance-linked manner, to further improve their financial health. The stress faced by coal-based power projects has eased with improvement in coal availability. However, delayed payments by distribution companies, gas supply constraints, level of stressed assets in the sector, etc. continue to pose challenges for power producers. Ordering for new capacity has been mainly from the government utilities, with the private sector still grappling with existing capacities issues.

Growth in hydro-power generation capacity appears to be a possible solution, with only around 38% of India’s hydropower potential of 149 GW being harnessed so far. Interestingly, more than 30% of India’s hydropower plants have completed 30-35 years of operation, providing potential for Renovation & Modernization (R&M) for life extension, and performance & efficiency upgrades.

Nuclear power continues to remain an integral part of India’s mission for self-reliance and long term sustainability. As part of the installation of 10 reactors of 700 MThe company rating in ‘Fleet Mode’ in a phased manner, procurement activities for 10x700 MThe company PHWRs (in addition to 2x700MThe company GHAVP project) are under various stages of implementation by Nuclear Power Corporation of India Limited. This is expected to fructify as a substantial business opportunity.

BHEL is one of the few companies in the world manufacturing the entire range of power plant equipment, with proven capabilities for executing thermal, gas, hydro and nuclear power projects.

With the capability for concept to commissioning project execution for thermal power plants encompassing steam turbines, generators, boilers and matching auxiliaries up to 1000 MW ratings, BHEL has experience of executing numerous projects with supercritical thermal sets of 660/700/800 MW ratings on Engineering, Procurement and Construction (EPC) basis.

BHEL supplies and installs Circulating Fluidized Bed Combustion (CFBC) boilers for thermal plants, suitable for wide range of lowcalorific fuels like pet-coke, lignite, etc. BHEL offers gas turbines and matching generators up to 299 MW (ISO) rating, tailored to meet specific needs, for both open and combined cycle operation.

In nuclear power sector, BHEL is amongst few organizations that are associated in all the three stages of Indigenous Nuclear Power Programme of the country, on both the primary and secondary sides. BHEL supplied 220/235/500/540 MThe company Nuclear Turbine Generator sets are already under operation, and presently BHEL is executing 700 MThe company sets.

BHEL has the capability for engineering and manufacturing custommade conventional hydro turbines of Kaplan types (up to 100 MW), Francis and Pelton types (up to 400 MW), Bulb turbine up to 10 MW. In addition, BHEL has capability for engineering and manufacturing of reversible pump turbines (up to 250 MW), high capacity pumps for lift irrigation schemes (up to 150 MW) and turbines for small hydro power plants. Other hydro products in BHEL’s manufacturing range includes custom-made salient pole vertical synchronous hydro generator and Lift irrigation scheme(LIS) motor up to 400 MW, and horizontal generator up to 20 MW along with matching static/ brushless excitation system.

Industry Sector

Industry Sector offers a broad range of industrial systems and products for the major sectors of the Indian economy. With focus on growth of non-coal based business of the company, Industry Sector comprising of market-focused groups, offers comprehensive solutions for Transportation, Transmission, Renewables, Energy Storage Systems and e-mobility, Water Management, Defence & Aerospace, Captive Power Generation and Mechanical & Electrical Industrial Products.

During 2019-20, Industry Sector secured orders worth ₹ 8,757 crore, which includes highest ever order booking in Solar, Defence & Aerospace and Transmission products segments. Order booking is the highest in the last nine years, despite high level of competition, and continued to be more than ₹ 7000 crore for the 3rd consecutive year.

Transportation

Domestic transportation sector is embracing faster, safer and more reliable technologies. With the Indian Railways upgrading its systems, growth in the capital investment outlay of the Indian Railways has provided a thrust towards electrification, upgradation of tracks, signalling, station development, etc. There is requirement of new types of rolling stock such as Trainsets, High Horse Power (HHP) Locos, Air Conditioned Electrical Multiple Units (EMU’s) and Mainline EMU’s. Average annual demand of approx. 300-400 EMU/MEMU coaches is expected in the next few years. After rolling out the in-house developed semi-high speed Vande Bharat Express in FY 2018-19, the Indian Railways are planning to induct additional 44 such trainsets. With state authorities pursuing mass rapid transit projects in cities having a population of over two million, and light rail/ monorail being explored in small cities, the urban transportation segment is also poised to grow. Metro projects have already been announced in more than 50 cities.

Renewable Energy

Out of the 100 GW capacity of Solar Photovoltaic Power Plants planned till 2022, 35,605 MW has already been installed in the country as on March 31, 2020. Despite Govt. of India’s impetus on boosting domestic manufacturing through CPSE Scheme Phase-II and manufacturing linked-developer tender, imports continue to be cheaper compared to indigenously manufactured solar PV value chain components. There is also an increased focus on integration of Battery Energy Storage System (BESS) with the solar PV plants. The growth of solar is driven by new technology developments in higher output from the available area, ensuring continuous round the clock power supply by solar-wind and energy storage hybrid solutions. However, volatile tender & auction activity due to falling tariffs, land acquisition & power evacuation constraints, PPA renegotiations, policy uncertainty around Anti-Dumping Duty, and GST, among others are some constraints faced by the sector.

Defence & Aerospace

The rapidly evolving security scenario along some parts of India's neighborhood has made it critical for India to invest in the modernization, upgradation as well as indigenization of India's defence equipment. Defence spending and investment are expected to increase as India fast-tracks its military modernization. India is expected to spend more than $130 billion in the next decade on buying new weapons. Defence sector is included in the government’s ‘Make in India’ plans with the objective of promoting domestic defence production.

Metal and Mining Sector

Steel Policy 2017 envisages expansion of steel manufacturing capacity from 130 MT to 300 MT by 2030. Aluminium sector is set to grow from 3.6 MTPA to 7.2 MTPA in next 5 years. Secondary steel Industries are seeking expansion, which will call for power requirement of STG based CPP in sub 50 MW range. NALCO plans to invest ₹ 45,000 Crore for capacity expansion from 0.44 MTPA to 1MTPA, which will generate demand for BTG package for CPP.

Cement Sector

Cement manufacturing capacity of India stood at 505 MTPA, to be expanded to 550 MTPA by 2025. STG demand in sub 50 MW range continues to grow in this segment. Many major cement industries are undergoing expansion.

Battery Energy Storage System

With increase in the share of renewable energy in the electric grid, energy storage is set to become an integral part of the power system to ensure grid stability and power quality. The market potential for the energy storage market is expected to reach 2-3.5 GWh by 2022 as per Indian Energy Storage Alliance (IESA) estimates. Companies such as NTPC, SECI, NLC have floated tenders for energy storage systems to support Solar plants.

As part of the National Mission on Transformative Mobility and Battery Storage, government is considering to facilitate establishment of battery-making capacity of 40 gigawatts (GW) in India to give a boost to the EV and RES initiatives, with an expected investment of $40 billion.

Railway Electrification

Indian Railways has a target of electrifying approximately 30,000 RKMs (Route KMs) by 2022 and is releasing tenders in EPC mode. Through Central Organization for Railway Electrification (CORE) tenders were floated for 7 sections totaling around 6266 RKMs on Two Stage Bidding Process (RFQ & RFP). BHEL was short-listed as one of the applicants based on RFQ to participate in the Bid Stage (RFP). Out of the 7 sections, tenders for 4 sections were annulled and reissued with New EPC Model (single-stage, two packet systems through IREPS). Finalization of these tenders is underway.

Financial Highlights

BHEL Consolidated March 2020 Net Sales at Rs 5,049.81 crore, down 50.97% Y-o-Y³

Net Sales at Rs 5,049.81 crore in March 2020 down 50.97% from Rs. 10,299.01 crore in March 2019.

Quarterly Net Loss at Rs. 1,532.18 crore in March 2020 down 322.64% from Rs. 688.20 crore in March 2019.

EBITDA stands negative at Rs. 415.94 crore in March 2020 down 127.5% from Rs. 1,512.36 crore in March 2019.

BHEL shares closed at 31.40 on June 12, 2020 (NSE) and has given -30.53% returns over the last 6 months and -53.96% over the last 12 months.

BHEL Q2 net up 33% at Rs 1,142 crore on good revenue from power sector⁴

Oct 29, 2010 BHEL today reported a 33 per cent increase in its net profit at Rs 1,142.28 crore for the quarter ended September 30 on the back of good revenues from the power sector.

The company had posted a net profit of Rs 857.88 crore during the same period last year.

BHEL's revenues from power sector stood at Rs 6,965 crore during the July-September quarter, registering a growth of over 28 per cent against Rs 5,428.3 crore reported during the corresponding quarter of the last year.

Net sales of the company rose by 25.70 per cent to Rs 8,328.41 crore during the second quarter this fiscal as against Rs 6,625.21 crore for the same period previous fiscal, BHEL said in a filing to the Bombay Stock Exchange.

In a statement, the company said, "With this kind of result, BHEL has maintained its track record of earning profits uninterruptedly for nearly four decades".

"With the highest-ever order book position of Rs 1,54,000 crore at the end of the second quarter, the company expects to achieve robust growth in 2010-11 and beyond," the statement added.

For the first half of this fiscal, the company posted a net profit of Rs 1,809.9 crore, registering a growth of over 36 per cent, against Rs 1,328.5 crore reported during the corresponding period a year ago.

In the six month period this fiscal its net sales stood at Rs 14,808.1 crore up 21.17 per cent compared to Rs 12,220.9 crore reported during the same period a year ago.

The largest public sector engineering company, which is capable of delivering equipments of 15,000 MW per annum, is augmenting the capacity to 20,000 MW.

Recent developments

BHEL secures first ever overseas solar project ⁵

March 22, 2021;State-owned engineering firm BHEL on Monday said it has bagged its first ever overseas order for a grid- connected solar power project in Mauritius.

The project will be set up by BHEL at Tamarind Falls, Henrietta (Phase II), Mauritius on Engineering, Procurement and Construction (EPC) basis, BHEL said in a statement.

"BHEL has achieved yet another milestone in international business by securing its maiden overseas turnkey contract for a grid-connected 8 MWac Solar Photovoltaic (PV) power plant,” it said.

The contract has been awarded to BHEL by CEB (Green Energy) Co. Ltd, Mauritius, a wholly-owned subsidiary of Central Electricity Board, Government of Mauritius.

The project is funded under Government of India’s Line of Credit and has been secured by BHEL through a competitive bidding process.

The project will be executed by BHEL’s Solar Business Division, Bengaluru and International Operations Division, New Delhi.

It marks the consolidation of BHEL’s presence in Africa, where it has been active for more than four decades with electricity generation projects (approximately 2,100 MW) and equipment supplies in 23 African countries.