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Created by Group 3
PSU SECTORS
• Group Three • Raghavi• Deepali• Vaseem• Sachin• Nita
25
Created by Group 3
Flow of Presentation
• Introduction• Mission & Vision • Values• Business Model• Corporate Strategy• GE Matrix• Ditch Diagram • BCG Matrix• SWOT analysis• Product Life Cycle • Competitors• Recent news.• Question & Answer
Created by Group 3
PSU SECTORS
HINDUSTAN PETORLIUMOIL & NATURAL GAS CORPORATIONMAHAVITARAN [MSEB]MMRDAMHADABHARAT PETROLIUMBSNLHMTBHEL [BHARAT HEAVY ELECTRICALS LTD.]MAHAGENCO [MAHARASHTRA STATE POWER GENERATION COMPANY]SAIL [STEEL AUTHORITY OF INDIA LTD]BEML [BHARAT EARTH MOVERS LTD.]
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Introduction
Was set up in 1959 by the Government of India.
wide-spread network comprising 14 manufacturing divisions, 8 service centers, 4 power sector regional centers, 18 regional offices
is the 12th largest company in the world in Power Plant Equipments manufacturing and thelargest in India.
has the ability to manufacture the entire range of power plant equipment.
has one of the largest capacities of power plant equipment in the world.
which could handle turnkey businesshas a capital base of Rs. 244.8 crore
current market capitalization is Rs. 3451.12 crore.
is undoubtedly a jewel in the crown of the public sector.
an export presence in more than 70 countries
Bharat Heavy Electricals Limited
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Vision : A world class Engineering Enterprise committed to Enhancing Stakeholders Values.
Mission & Vision
Mission : To be an Indian Multinational Engineering Enterprise providing. Total Business Solutions through Quality products, Systems and Services in fields of Energy, Industry, Transportation, Infrastructure & other potential areas.
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VALUES
Zeal to Excel and Zest for Change
Integrity and Fairness in all matters
Respect for Dignity and Potential of Individuals
Strict Adherence to Commitments
Ensure Speed Response
Faster Learning, Creativity and Team-Work
Loyalty and Pride in the Company
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Business Model
BHEL –Business Breakup
Power Division Industry Division
Transportation Transmission Industrial
Overseas Business
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Power Division
The performance of power division is related with the Indian power capacity.
This division manufactures products and systems for thermal, nuclear, gas and hydro based power plants.
It include turbines, generators and boilers with matching auxiliaries.
BHEL has an installed capacity of 7000 MW p.a. of power equipment.
BHEL contribution to the total capacity in the country is around 65% (around 60000 MW out of the total 92350 MW).
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Industry DivisionTransportation
• The demand in this segment mainly comes from Indian railways and particularly for traction motors which forms a significant part of this division sales.
• The demand from railways is for replacement and modernisation and this would continue to be a steady source of business for the company.
• In case of locomotives, BHEL has been supplying locos to Indian railways on BOLT basis in the past.
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Transmission
• This sub-division caters :
Transmission & distribution network of power sector.
• It includes transformers, switchgears, substations, High voltage DC lines.
• The demands for these products are directly linked to investments in the industrial sector and capacity additions in the power sector.
• The companies of their virtue of having a long chequered history in this segment are better placed in getting orders, especially in the transformers segment, where it has maintained its market position.
Others35%
BHEL21%
Crompton Greaves
17%
Vijay electricals
8%
Emco transfomers
7%
G E 6%
Imports6%
Others
BHEL
Crompton Greaves
Vijay electricals
Emco transfomers
G E
Imports
Market Share in Transmission Segment
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Industrial
BHEL involved in the development design , engineering , marketing , production , installation , and maintenance and after - sales service of rolling stock and traction propulsion systems.
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BHEL's overseas presence spans 70 countries in all the six continents of the world.
The Overseas business is one of the major focus areas for the company.
The company has about Rs.1020 crore Exports business in the year 2008.
Overseas Business
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Corporate Strategy
• Expansion of Production Capacity
• Cost Leadership
• Starting Joint Venture to tap business in new emerging business segments
• Completion of Project on Time
• Commitment towards TQM
• Updating of Technology from time to time with collaborative tie-ups with world leaders.
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STRATEGIC PARTNERSHIP
• Acquisition of Bharat Heavy Plates and Vessels (BHPV)
• Joint Venture with NTPC.
• JV with Nuclear Power Corporation of India Ltd (NPCIL)
• JV with Heavy Engineering Corporation (HEC)
• JV with Tamil Nadu Electricity Board (TNEB).
• JV with Siemens AG of Germany.
• JV with GE of the US.
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NEW BUSINESS AREA
• BHEL has ventured into the business of defence applications.
• It has obtain a high volume of business from the ministry of defence.
• The total turnover of the industrial segment, supplies to defence (which are mainly armoured recovery vehicles and naval guns) comprise about 7%.
• BHEL is entering into Integrated Gasification Combined Cycle systems, Coal
Washeries, LRT Systems etc.
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STRATEGY BUSINESS
• BHEL is involved in several strategic business initiatives for internationalization.
• BHEL targeting the export markets, positioning as a reputed engineering ,procurement & construction (EPC) contractor globally & looking opportunities for overseas joint ventures.
• It has management contract for Bharat Pumps & Compressors Ltd & proposed takeover of Bharat Heavy Plates & Vessels (sister concern PSU ).
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Competitive Strength
• BHEL has been internationally competitive.
• The company has successfully proved by bagging over 86% of power plant orders under international competitive bidding (ICB) in the domestic market.
• With a market share in the power industry in excess of 70%, BHEL has built up enough financial strength.
62.10%24.60%
13.30%BHEL
CHINESE
OTHERS
Share in 11th Plan Thermal Orders
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POWER
GAS
THERMAL
TRANSMISSION
INDUSTRIAL
TRANSPORTATION R & D PRODUCT
OVERSEAS
Strong Average Weak
High
Medium
Low
GE MATRIX
Telecommunication
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Ditch Diagram
BHEL
OTHERS
L & T
Reliance Infra
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BCG MATRIXTARS ? MARKS
CASH COWS DOGS
Overseas Business,Super Critical Business
Transmission BusinessTECHNOLOGY.Transportation Business
Nuclear power plant & Thermal Power Plant BusinessCoal based 75 %Nuclear based 65 %Hydro based 50 %
NA
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180 Products under 30 major product group. Ability to acquire the new technology. Strong relationship
with NTPC-85% of its projects bagged by BHEL. Positive Drivers.
trengths
eakness
pportunities
hreats
PSU Status, stringent credit facilities to the customers in rising competitions. Vertically integrated, no outsourcing.
Good future in India for Power sector, increase in defense budget, NTPC plan for addition 2800 MW, Business modernization & renovation, Joint venture with Siemens in the name of Powerplant.
The global trend of consolidation, more dependency on NTPC, Elimination of Import license
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Competitors
CESC (Calcutta Electric Supply Corporation)
Larsen & Toubro
Siemens
GAIL (Gas Authority of India Limited)
Reliance Infrastructure. Tata Power
Lanco
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BHEL can Anticipate
BHEL’s expected performance for the year 2008-09
Gross Sales (Turnover) (Rs. Millions) 250,000
Gross Margin (Rs. Millions) 57,240
PBDIT to Total Employment (Rs. Millions) 1.241
Gross Margin to Gross Block (%) 95.71
Gross Profit to Capital Employed (at year end) (%) 79.83
Net Profit to Net Worth (at year end) (%) 26.64
Added Value to Gross Sales (%) 20.25
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Recent News
BHEL and KEL to form JV.
BHEL achieves major landmark with the supply of Space Grade Solar Panels for first satellite export project of ISRO
BHEL and KPCL float JV Company for setting up Supercritical Thermal Power Projects in Karnataka.
BHEL Plans to increase spending on R & D & also planning to implement ERP in HR to improve efficiency.
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5 generic competitive strategies
Overall low cost Leadership
strategy
Broad Differentiation
strategies
Focused Differentiation
strategies
Focusedlow cost strategy
Best-Cost Producer Strategy
Buyer Segment or Niche
Broad range of Buyers
Lower Cost DifferentiationTARGET
MARKET
TYPE OF ADVANTAGE SOUGHT
BHEL
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Life Cycle portfolio mixLife Cycle portfolio mix
Weak
Average
Strong
Early Development
IndustryTakeoff
RapidGrowth
Shakeout
Maturity Market Saturation
Decline
Stage in life cycle
Com
peti
tive
Pos
i ti o
n
BHEL 64%
Created by Group 3
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08
658.15 1003.75 1679.16 2414.70 2871.11
Net Profit for the last 5 Years in Crores
Created by Group 3Private & Confidential 28
The 5 force model of competitive analysis of BHEL.
Substitute. (No Substitute)
BuyersNTPC & Govt Entities
Potential newEntrants
(Chinese Player, Korean)
SuppliersRivalry among
Competing sellers(L & T,GAIL, Siemens)
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Thank you very much for listening to us.