Bharat Heavy Electricals Limited (BHEL), the country’s largest engineering and manufacturing company, continues to maintain a strong foothold in the Indian power sector. BHEL holds nearly 55 per cent share of the country’s total installed thermal capacity for utility-scale power projects, 48 per cent of the nuclear power generation capacity and 44 per cent of the hydropower generation capacity in the country by the end of 2022-23. BHEL-supplied sets contributed 60.6 per cent to the country’s total generation from coal and lignite-based utility sets.
In the past fiscal year, 2022-23, BHEL’s accomplishments spanned a variety of projects and orders, from substations and AIS bay extensions to the successful initiation of supercritical steam generators and turbine generators. Another highlight for the company was the substantial capacity expansion in utility power projects, constituting 100 per cent of the country’s total commissioning for thermal, hydro and nuclear sets during the period.
BHEL has been diversifying into other segments in recent years and is working on a long-term target to derive at least 50 per cent of its business from non-coal sectors. The company achieved some notable successes in this area in the past year, with the industry segment order book going up to 40 per cent of the total order bookings, including the highest highest-ever orders in the defence sector. Further, the company is focusing on other high-growth segments such as carbon capture, coal gasification and green hydrogen.
Orders won
During 2022-23, the company secured orders worth Rs 235.48 billion, (excluding taxes) which is the highest in the past five years. As of March 2023, BHEL’s total outstanding order book, net of taxes, stood at Rs 913.36 billion, a slight increase, from that in the previous year, of Rs 900.84 billion.
A major highlight for the company during 2022-23 was the winning of the only thermal engineering, procurement and construction (EPC) order to be awarded in the past four years in the thermal power segment for the 2×660 MW Talcher thermal power plant from NTPC.
More recently, in August 2023, BHEL secured a Rs 40 billion order from Mahan Energen Limited for the 2×800 MW supercritical power project in Madhya Pradesh. Simultaneously, BHEL secured another order from NTPC Limited for the 2×800 MW Lara supercritical thermal power project Stage II in Chhattisgarh.
In September 2023, BHEL secured an order from NHPC Limited for electro-mechanical works of the 2,880 MW Dibang multipurpose project in Arunachal Pradesh.
During 2022-23, various renovation and modernisation projects were also secured by BHEL. The company secured orders totalling 2,400 MW in the power sector, amounting to Rs 133.53 billion. Notably, the spares and services business, with a growth of about 25 per cent, reached its highest-ever order booking of Rs 38 billion. Significant orders included EPC contracts for thermal and hydropower projects, heat rate (efficiency) improvement projects and life extension projects for steam turbines. In January 2023, BHEL secured a Rs 3 billion order from Gujarat State Electricity Corporation Limited (GSECL) for renovating and modernising steam turbines at the Ukai Thermal Power Station.
In 2022-23, in the transmission sector, notable orders included a substation package for 400/220 kV substations in Mandsaur and Chhitorgarh, 400 kV GIS substations, 400/220 kV GIS substations and 400 kV AIS bays extension. The company secured orders for 55 units of 500 MVA, 765/400 kV transformers and a total of approximately 51 units, 7,706 MVA for 400 kV and 220 kV transformers from central/state transmission utilities.
Financial performance
BHEL demonstrated a strong financial performance in financial year 2022-23, with an overall revenue growth of approximately 10 per cent, reaching Rs 221.36 billion, compared to Rs 201.53 billion in the previous year. Revenue from operations witnessed a 10 per cent growth, reaching Rs 23.365 billion compared to Rs 21.211 billion in financial year 2021-22. Over the fiscal years 2018-19 to 2022-23, BHEL reported annual revenues of Rs 294.23 billion, Rs 204.91 billion, Rs 162.96 billion, Rs 201.53 billion and Rs 221.36 billion, respectively.
The profit after tax (PAT) showed a notable increase from Rs 4.1 billion in financial year 2021-22 to Rs 4.48 billion in financial year 2022-23, an increase of 9.3 per cent. Additionally, BHEL achieved earnings before interest, taxes, depreciation and amortisation of Rs 12.31 billion, reflecting a growth of more than 11 per cent. A capital expenditure of Rs 2.62 billion was incurred during financial year 2022-23.
Key initiatives
BHEL has shifted from a “revenue-centric” approach to a “project-centric” strategy, emphasising concentrated efforts in project execution. This transformation involves the implementation of an Integrated Project Management System, sequential despatches, advanced engineering planning and action, enhanced delegation to project directors and the digitalisation of site data. The company has also launched the “Quality First Initiative” across the organisation, operating on a mission mode.
BHEL is actively involved in the research and development (R&D) for new business areas, including coal to chemicals, high-efficiency thermal plants, rail transportation, defence, aerospace, hydrogen value chain, and downstream oil and gas, among others.
In August, an MoU was signed between BHEL and Greenstat Hydrogen India to explore opportunities in green hydrogen projects worth Rs 155.3 billion. BHEL has also taken up work on setting up a Centre of Excellence for Electrolysers, Type IV hydrogen storage cylinders and a national testing facility for Type IV hydrogen storage cylinders.
BHEL is also leveraging its indigenously developed coal gasification technology and has completed the design and engineering of the gasifier for a 2,000 tonnes per day commercial-scale plant. Further, the process of setting up a joint venture with Coal India Limited for developing a coal-to-ammonium nitrate plant is in advanced stages. This will open up a major business area for BHEL under the National Coal Gasification Mission.
As an established EPC player in the domestic solar energy market with a portfolio of 1.2 GW, indigenous manufacturing assets of solar PV cells (105 MW per annum) and PV modules (226 MW per annum) and with the recent imposition of basic customs duty on imported Solar PV cells and modules, BHEL is selectively addressing upcoming opportunities. In addition, leveraging its experience in engineering and execution strength, BHEL is capitalising on opportunities in floating solar power plants.
BHEL is also executing works at Kudankulam 2×1,000 MW Units 3 and 4, being set up with Russian cooperation and is working with various stakeholders to indigenise and increase its offerings in the sector.
Ordering for emission control equipment also saw traction from various utilities such as Odisha Power Generation Corporation Limited, GSECL and Tamil Nadu Generation and Distribution Corporation Limited, during financial year 2022-23 and a number of tenders are in the pipeline, both from central and state sector utilities, for retrofitting the emission control equipment in the existing power plants.
In the EV charging space, BHEL has taken up several in-house development initiatives. With successful development and certification of 122 kW charger and certification of 50 kW charger being taken up, BHEL is geared up to address the requirements of EV charging stations by offering EPC solutions in the segment. Also, initiatives to develop and manufacture other ratings of EV chargers are being undertaken. BHEL is also actively pursuing battery energy storage business opportunities in the EPC mode.
The company is also expanding its global footprint. At present, major projects under execution in the overseas market include the 2×660 MW Maitree thermal power project in Bangladesh; 6×200 MW Punatsangchhu-I and 6×170 MW Punatsangchhu-II hydro projects in Bhutan; 8 MW solar PV project in Mauritius; 4×225 MW Arun-3 hydro project and 2×20 MW Rahughat hydro project in Nepal; 26 MW Calabar gas-based power project and 1.3 MW Kaduna Solar mini-grid project in Nigeria; 2×200 MW Tishreen thermal project in Syria, besides a host of orders for spares and services.
Outlook
BHEL has outlined a comprehensive strategic plan for the period 2022-27, addressing immediate challenges related to profitability, liquidity, quality and project execution delays. The overarching goal is to transform BHEL into a “future-ready global engineering organisation”. Initiatives include diversification into new products and services, achieving technological self-sufficiency and cultivating a skilled and motivated workforce.
Overall, BHEL is strategically positioned to capitalise on opportunities, contribute to emission reduction and play a pivotal role in India’s sustainable energy solutions. The company’s commitment to innovation and development across key growth sectors further ensures a promising future.
