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1.INTRODUCTION
1.1 Background of Project
1.2 Assignment & Objectives
1.3 Instruction to Reader
1.4 Limitation
1.5 Organisational Profile
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1.1 BACKGROUND OF THE PROJECT
The Supercritical Technology market in India is in its nascent stage as compared to the USA
market which is one of the world’s leading electricity generator and consumer. If we compare
the per capita energy or electricity availability in India which is 6419.30 KWh and the
world’s average then it is found to be a very small fraction of that. So Govt. of India has laid
more emphasis on the efficiency improvement of the power plant through advanced
technology like the Supercritical Technology. The major players for this sector are BHEL,
L&T, Doosan Heavy Industries, Thermax, BGR etc.
But no other players than BHEL is yet successful to fully exploit the capacity and market
condition. This report focuses on the credentials of the major players like BHEL, Doosan and
L&T MHI Boilers and find out the drivers of the success for BHEL which can be
implemented and followed at L&T MHI Boilers to improve its sales and market position.
Simultaneously it also emphasizes the strategies to be adopted to reach the objective.
1.2 ASSIGNMENT AND OBJECTIVES
Assignment
The primary purpose of the study is to study the development of supercritical power
generation equipment (especially boiler) market with focus on Indian Subcontinent and
gather knowledge about the major players of the industry to suggest the strategic approach for
L&T MHI Boilers Pvt. Ltd. to capture the major market share in India in its segment.
Objectives
This report addresses the following issues.
1. Comparative analysis of the Supercritical Boiler Manufacturers of India
2. SWOT analysis of the major players of the market.
3. Learning for L&T MHI Boilers Pvt. Ltd.
4. Strategic Evaluation of L&T MHI Boilers Pvt. Ltd.
5. Suggestions and Recommendations for L&T MHI Boilers Pvt. Ltd. for improving its
operational and selling efficiency
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1.3 INSTRUCTION TO READER
• This report is meant for the executives and students who are already having
knowledge of power sector and well aware of the functioning of the Coal Based
Thermal Power Plant.
• Analysis in the report is subjected to the availability of data.
• The findings and recommendations are the personal view point of the author.
1.4 LIMITATION
• The data collected for BHEL and Doosan Heavy Industries are from Secondary
Sources and presentations given by the company at different places. But complete and
up to date data was not available as most of them are related to trade secret of these
companies and volatile in nature. The law of protection of confidential information
effectively allows a perpetual monopoly in secret information. So that information
can’t be shared through the report.
• The report focuses on Supercritical Boiler Manufactures in Indian scenario only.
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1.5 ORGANISATIONAL PROFILE
The L&T Group
Larsen & Toubro Limited (L&T) is a technology, engineering, construction and
manufacturing company. It is one of the largest and most respected companies in India's
private sector.
Seven decades of a strong, customer-focused approach and the continuous quest for world-
class quality have enabled it to attain and sustain leadership in all its major lines of business.
L&T has an international presence, with a global spread of offices. A thrust on international
business has seen overseas earnings grow significantly. It continues to grow its overseas
manufacturing footprint, with facilities in China and the Gulf region.The company's
businesses are supported by a wide marketing and distribution network, and have established
a reputation for strong customer support.
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Founded: in 1938
Today: Asia’s leading Engineering and Construction Company
Export growth: Over 60%
Int. Partners: 153 strategic relationships
12 Joint Ventures with global leaders
Revenue: $13.7 billion US dollars
Resources: 45 117 people in 130 offices around the globe
Head Quarters: Mumbai, India
Businesses: Construction Services
Engineering & Construction Projects
Heavy Engineering
Electrical & Electronics
IT & Technology Services
Machinery & Industrial Products
L&T‘s Joint Ventures
E&C Projects Electrical & Electronics
Heavy Engineering
Diversified Business Construction
Information Technology
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Introduction to L&T – MHI Boilers Pvt. Ltd.
Established on: 16th April 2007
Technology Transferred Agreement signed on: 27th October, 2006
Commenced Manufacturing: 2010
Type of Company: Joint Venture Company of L&T and Mitsubishi heavy Industries, Japan
Shareholding Pattern: 51% L&T and 49% MHI
Product: Supercritical Boilers
Range: 500 to 1000MW Boilers and Pulverisers
Manufacturing Facility at: Hazira, Surat
Annual Production Capacity: 4000MW equivalent
License: Exclusive in India and Non Exclusive outside India
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2.LITERATURE REVIEW &
RESEARCH METHODOLOGY
2.1 History of Supercritical Boilers
2.2 Technology of Supercritical Boilers
2.3 Indian Electricity Generation Equipment Market
2.4 Research Methodology
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2.1 HISTORY OF SUPERCRITICAL BOILERS
Once through boilers has long been the vision of boiler design engineers. In the United
States, patents for once through boiler concepts date from as early as 1824. These early
inventors were undoubtedly motivated by the desire to improve the product safety because of
the notoriety of pressure vessel failures associated with the early fire tube and water tube
boilers. While advances in the boiler industry in the late 1800s such as developments by The
Babcock & Wilcox company (founded in 1867) significantly improved product safety,
interest continued in the development of once through both as a way to eliminate the need for
the steam drum and with the hope that the design would cope with the impurities contained in
the water. B&W’s research in once through boilers dates from 1916 when the boiler research
began at the company’s Bayonne, New Jersey Laboratory. In keeping with the technology of
the time, this early research unit was operated at a pressure of 4 Mpa. The first significant
commercial application of once through boilers was made by Mark Benson, a
Czechoslovakian inventor, when he in 1923 provided 4-ton/hr unit of English Electric Co.,
Ltd. At Rugby, England. This unit was designed to operate at critical pressure with the belief
that operating at this pressure where there is no density difference between steam and water,
would avoid boiler tube overheating and solid deposition.
Mark Benson continued his development work, which included the installation in 1930 of a
113 ton/hr unit in Belgium. Like the unit for English Electric, this unit was intended to
operate at critical pressure. Operating at critical pressure however didn’t fulfill the hoped
elimination of problems by operating at critical pressure, fulfilled and it was necessary to
reduce the boiler operating pressure to overcome problems with tube failures. In this case, the
boiler inventor’s vision outreached the technology available at this time for both tube
materials and water chemistry control. Nonetheless, these early units were successful
operation and served as the foundation of the boiler development work that set the direction
for the European Boiler development. Siemens ultimately acquired Mark Benson’s concepts
and it is from these concepts that the Benson boiler technology now licensed worldwide by
Siemens was developed. B&W also continued with their work on Once Through boilers in
the 1920’s as boiler and power plant engineers envisioned the efficiency gains that could be
achieved by the use of ultra-critical pressure cycles. B&W in 1923 began experimental work
at its Research center on a test facility capable of operation at 34.5MPa and 520C. The test
facility was used to examine the Thermal, Hydraulic and heat transfer effects in the pressure
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range from 10MPa to the maximum operating pressure of the unit. The test rig was then
transferred to Purdue University where Research continued with collaboration with B&W.
Much of the works were reported in the Technical Papers in the early 1930’s by the authors
such as Kerr and Potter. Through the 1930’s and 1940’s power plant operating conditions
were limited to the subcritical regime because of the limitation of the metallurgy and water
chemistry control technology. In Europe, boiler technology followed the once through
philosophy. This at least in part was driven by material availability constraints and took
advantage of the fact that once through boiler generally used smaller diameter and thinner
wall tubes then did the natural circulation boiler. In addition, the once through boiler
eliminated the need for thick steel plate for the steam drum.
The rapid development of the B&W once through boiler paralleled the rapid expansion of the
United States Utility Industry in the 1960s and 1970s. The second and third boiler contracts
were also with American Electric Power, but these 450MW systems were ordered before the
Philo unit went into service. Both the boilers were tower style designs.
2.2 TECHNOLOGY OF SUPERCRITICAL BOILERS
What is Critical about Super Critical Power
Generation?
Supercritical is a thermodynamic expression
describing state of substance where there is no clear
distinction between the critical and gaseous phase (i.e. they are a homogenous fluid). Water
reaches this phase at a pressure above around 220Kg Bar (225.56 Kg/cm2) and temperature
374.150C. In addition there is no surface tension in a
supercritical fluid as there is no boundary between
liquid and gas phase.
By changing the pressure and temperature of the fluid,
the properties can be “tuned” to be more liquid- or
more gas like. Carbon dioxide and water are the most
commonly used supercritical fluids, being used for
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decaffeination and power generation, respectively.
Challenges for adoption of Supercritical Technology
• Up to an operating pressure of around 193.74 Kg/cm2 in the evaporator part of the
boiler, the cycle is Sub-Critical. In this case a
drum-type boiler is used because the steam
needs to be separated from water in the drum
of the boiler before it is superheated and led
into the turbine.
• Above an operating pressure of
224.337Kg/cm2 in the evaporator part of the
Boiler, the cycle is Supercritical. The cycle
medium is a single phase fluid with
homogeneous properties and there is no need
to separate steam from water in a drum.
• Thus, the drum of the drum-type boiler which is very heavy and located on the top of
the boiler can be eliminated.
• Once-through boilers are therefore used in supercritical cycles.
• Advanced Steel types must be used for components such as the boiler and the live
steam and hot reheat steam piping that are in direct contact with steam under elevated
conditions.
Type Main Steam
Pressure, Bar
Main Steam
Temperature, °C
Reheat Steam
Temperature, °C
Base sub critical 166 538 538
Super critical 247 535 565
Ultra super critical-I 270 585 600
Ultra super critical-II 295 595 600
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Boiler for Supercritical Once Through Power Plant
• Once through Boiler technology, which originated in Europe, has evolved into the
most effective application for Supper Critical Steam condition.
• There are no operational limitations due to once through boilers compared through to
drum type boilers.
• In fact once-through boilers are better suited to frequent load variations than drum
type boilers, since the drum is a component with a high wall thickness, requiring
controlled heating. This limits the load change rate to 3% per minute, while once-
through boilers can step-up the load by 5% per minute..
Supercritical Cycle Benefits
Types of Boiler
Generally we consider two types of boilers- Drum Boilers and Once through Boilers.
Boiler Types
Drum Boiler
Natural Circulation
Boiler
Forced Circulation
Boiler
Once Through Boiler
Benson Boiler Sulzer Boiler
Sub Critical Supercritical
Plant Efficiency 34%-37% 41%
CO (in g/KWH) 0.42 to 0.45 0.38
NOX (in g/KWH) 0.42 to 0.45 0.38
SOX (in g/KWH) 3.4 to 3.6 3
Particulate (in g/KWH) 0.86 to 0.91 0.77
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Once Through Boiler
The main difference between the Benson and Sulzer type of boilers are discussed below.
Benson Boiler
Unlike the drum boiler, the once through boiler has no drum. This means that during the
once through operation the fluid passes through the economiser, evaporator and
superheater without any recirculation. Hence the evaporation end point is not fixed
locally. It moves depending on load as well as depending on balance between the fuel and
the feed water mass flow. The feed water mass flow influences not only the evaporation
endpoint, but also the steam mass flow, the steam temperature and the steam pressure.
Therefore it is very important for the feed water control to adjust the feed water mass
flow precisely, to the fuel mass flow.
For the rapid power output changes during the frequency control operation, the boiler
must be able to provide a certain amount of steam at a specific point of time. The Benson
boiler is able to store less steam than the drum boiler. If the Benson boiler provides the
necessary amount of steam at a specific point of time, it will lead to large steam pressure
deviations.
During low load operation the recirculation will take place in a Benson boiler. The
recirculation is obtained by means of the separator vessel, which has the same function as
the drum in a drum boiler. The aim of the recirculation is to avoid the flow of the water
instead of the steam to the superheaters and to the turbine in order to prevent these
components from damage.
Flow of Benson License
Benson Boiler Technology
Siemens Pvt. Ltd.
Hitachi PowerBabcock &
Wilcox Boiler
Thermax Limited
Alstom Boiler
BHEL
Ansaldo Caldaie
GB Engineering Enterprises
Foster Wheeler
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Sulzer Boiler
In contrast to the Benson boiler, the Sulzer Boiler operates by means of the separator
vessel during low load operation as well as during the once through operation. Due to the
separator vessel, the evaporation endpoint is fixed locally. The water level in the
separator vessel represents the balance between the feed water and the fuel mass flow.
Depending on the water level of the separator vessel, the feed water mass flow has to be
changed. The storage capacity of the Sulzer boiler is slightly larger than the one in the
Benson boiler.
Flow of Sulzer License
Comparison between Benson Spiral Design and Sulzer Vertical Wall Design
Parameters Vertical Tube Wall– Sulzer
Design
(optimized Rifle Tube)
Spiral Tube Wall- Benson
Design
(Smooth Tubes)
Comparison of Flow Characteristics
Velocity of Fluid in Tube Low High
Dynamic Characteristic of
Fluid
Decrease of Static head is
greater than the increase of
friction resistance when heat
absorption increases, which
Decrease of Static head is less
than the increase of friction
resistance when heat
absorption increases, which
Sulzer Boiler Technology
Korean Heavy Industries
Mitsubishi Heavy
Industries
L&T (for Supercritical
Tech)
Formosa Heavy Industry
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Parameters Vertical Tube Wall– Sulzer
Design
(optimized Rifle Tube)
Spiral Tube Wall- Benson
Design
(Smooth Tubes)
makes decrease in total
pressure drop
makes increase in total
pressure drop
Flow Characteristic The more the heat absorption,
the higher the mass flow rate
of fluid: “Characteristic of
Natural Circulation”,
(∆G/∆Q)>0
The more the heat absorption,
the less the mass flow rate of
fluid: “Characteristic of Once
Through”, (∆G/∆Q)<0
Imbalance of Temperature Very Small (Advantage) Very Big (Disadvantage)
Cost of Construction and Operation
Cost of Construction Supercritical-100 (Base)
Ultra Supercritical- 104
Supercritical-102
Ultra Supercritical- 106
Cost of Operation Supercritical-100 (Base)
Ultra Supercritical- 96
Supercritical-103
Ultra Supercritical- 99
Weight of Pressure parts Higher Lower
Frictional Pressure Losses Lower Higher
Thermodynamic
Efficiency
42%(approx.) 38% (approx.)
CO2 Emissions Lower Higher
Coal Consumption
(GCE/KWH)
286 (for 2X600 MWe) 315 (for 2X600 MWe)
Auxiliary Power
Consumption
Lower Consumption Higher Consumption
Accumulation of Slag Less Accumulation More Accumulation
Capability in India
Indian
Company
Technical
Partner
Type of
Agreement
Waterwall
Arrangement
Type of Tubes
BHEL Alstom License Spiral Smooth Tubes
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Indian
Company
Technical
Partner
Type of
Agreement
Waterwall
Arrangement
Type of Tubes
Doosan Heavy
Industries Babcock
Doosan owns
Babcock Spiral Smooth Tues
L&T Mitsubishi Joint Venture Vertical Rifled Tubes
Thermax
Babcock &
Wilcox Joint Venture Vertical Rifled Tubes
BGR Hitachi Joint Venture Vertical Rifled Tubes
Gammon Ansaldo Gammon owns
Ansaldo Vertical Rifled Tubes
Cethar Riely/ Seimens License Vertical Rifled Tubes
2.4 Research Methodology
The project report focuses on two major parts analysis, comparison of L&T MHI Boilers with
its competitors and computing the strategic position of L&T MHI Boilers to suggest the
opportunities, ways to survive in the stagnant power market.
Collection of Data from Primary and Secondary Sources for BHEL, LMB and Doosan
Comparing the collected Data and Analysing the strategy followed
Evaluating the strategy followed by LMB using SWOT, TWOS, SPACE Matrix
Suggesting areas of improvement
Recommending the available opportunities
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3.INDIA’S GENERATION
EQUIPMENT MARKET
3.1 Indian Power Sector
3.2 Indian Electrical Equipment Industry
3.3 Indian Electrical Equipment Industry Mission Plan 2012-2022
3.4 Industry Competitiveness
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3.1 INDIA’S POWER SECTOR
Power is a necessary fuel for a growing economy. The Indian economy is on a rising path
targeting GDP growth rate of 8-9%. To achieve this growth, it is imperative that the proper
power infrastructure is in place.
India has the fifth-largest generation capacity in the world with an installed capacity of over
225 GW, as on 31st May, 2013 and is also the sixth-largest electricity consumer, accounting
for 3.4% of total global consumption. India’s total consumption in 2009 was estimated at 632
TWh. This is expected to increase to 2,465 TWh by 2035.
The industrial sector, due to increasing capacity additions, has the highest demand for
electricity across all sectors and is expected to remain high. The domestic and commercial
sectors are likely to experience a steady demand for electricity, but the share of agriculture is
expected to see a decline in the coming years.
Generation
Thermal energy accounts for the major share of generation in India. Share of wind and other
renewable forms of energy currently stands at around 12% of the total installed capacity.
Government plans to increase the share of power generated from renewable sources in the
coming Plans. India currently stands as the 5th largest and 3rd largest producer in the world
of hydro and wind energy respectively.
With envisioned capacity additions, India is expected to reach an installed capacity of
400GW by 2022. This increase will be in line with the country’s GDP growth plans of 8–9%
per year.
India’s Installed Total Capacity (as on 31st May 2013)
Total: 225 GW Source: CEA
0
50000
100000
150000
200000
250000
Thermal Nuclear Hydro RES Total Captive
153188
4780
3962327542
225000
34444.12
All Figures in MW
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Capacity addition in the 11th Plan has been 69% of the original target, which is encouraging.
This is expected to increase further in the 12th Plan.
Plan-wise Capacity Additions Envisaged and Percentage Achieved
3.2 INDIAN ELECTRICAL EQUIPMENT INDUSTRY
India’s electrical equipment industry is highly diverse and manufactures a wide range of high
and low technology products. The industry directly employs around half million persons and
provides indirect employment to another one million people. The industry can be broadly
classified into two sectors – generation equipment and T&D equipment. For 2011-12, the
industry size is estimated at ` 1.20 lakh crores, of which generation equipment segment
consisting of BTG contributed `31,000crores while the major T&D equipment segment of
transformers, cables, transmission lines, switchgears, capacitors, energy meters, etc.,
provided the larger share of ` 64,235crores. Other electrical equipment, including instrument
transformers, surge arrestors, stamping and lamination, insulators, insulating material,
industrial electronics, indicating instruments, winding wires, etc., contributed to `
25,000crores.
Source: IEEMA
Generation
Equipment
26%
Other
Electrical
Equipment
21%
Major T&D
Equipment
53%
Estimated Segment-wise EE
Industry Size (2011-12)
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Domestic Demand for Electrical Equipment
The demand for electrical equipment in India is expected to witness significant expansion on
the back of the growth of the power sector. The government is likely to add around 88.5GW
and 100 GW, respectively, under its 12th and 13th Five Year Plans.
Based on investment estimates and capacity addition targets, it is expected that the domestic
demand for BTG will be in the range of ` 125,000-150,000 crores by 2022, while that of the
T&D equipment industry will be ` 350,000–375,000 crores.
Plan-wise Equipment Demand (Cumulative)
Equipment 12th Plan (2012–2017)
(`Rs. ‘000 crores)
13th Plan (2017–2022)
(`Rs.‘000 crores)
Generation equipment (BTG) 300-350 500-600
T&D equipment 700-750 1000-1150
Source: EY Analysis
BTG Industry in India
Indian players, as well as global players focusing on the Indian market, have put in place
facilities to manufacture products based on supercritical technology. During the 11th Plan,
the share of supercritical technology was 14%, while in the 12th Plan the share of
supercritical technology will be more than 60%. More than 80 GW of supercritical sets have
been awarded by India till date. Foreign players have been the recipients of the major share of
such orders.
Foreign companies have received huge bulk orders, primarily from Indian private players for
power plants to be commissioned during the 12th and 13th Five Year Plans. As a result, most
BTG equipment players in India do not have healthy order books. This scenario would lead to
intensified competition for upcoming tenders.
Domestic Capacity and Utilisation
The annual capacity in the domestic BTG equipment industry segment is currently at 25 GW
and is expected to rise to 40 GW by 2014–15. Many Indian companies have entered into
partnerships with global players and there are significant capacity addition plans in the next
few years.
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4. MAJOR PLAYERS IN BOILER
MANUFACTURING INDUSTRY
IN INDIA
4.1 BHEL
4.2 Doosan Heavy Industries
4.3 L&T MHI Boilers Pvt. Ltd.
4.4 Comparison
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4.1 BHARAT HEAVY ELECTRICALS LIMITED
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4.1.1 About BHEL
Established in 1964
Engaged in design, engineering, manufacture, construction, testing, commissioning
and servicing of a wide range of products and services for the core sectors of the
economy, viz. Power, Transmission, Industry, Transportation (Railway), Renewable
Energy, Oil & Gas and Defence
BHEL has a share of 59% in India’s total installed generating capacity contributing
69% (approx.) to the total power generated from utility sets (excluding non-
conventional capacity) as of March 31, 2012.
a) Credentials
� A USD 9 billion Engineering & Manufacturing
enterprise of its kind in India
� A ‘Navaratna’ company and a Major Integrated
Power Plant Equipment Manufacturer in the
World
� Profit Making Company since 1971‐72
� Consistent Dividend Paying Company for over
thirty years (FY 1976 ‐ 77 onwards)
� References in over 75 countries
� Installed base of more than 1,20,000 MW
� 15 Manufacturing Units+ 2 Subsidiaries+ 7 JVs+ Infrastructure to deal with
150+ project sites
� Fully indigenized technology up to 600 MW
from world leaders
� Supplied steam turbines, generators, boilers and
matching auxiliaries up to 800 MW ratings
including supercritical sets of 660/700/ 800 MW
� 346 coal based sets installed, including 58 sets
of 500 MW rating
� 376 nos BHEL make Hydro Utility sets installed in India
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b) BHEL’s Manufacturing Locations
c) Share holding Pattern
68%
14%
1% 11% 6%
Shareholding Pattern as on 31st
March 2012
President of India
Foreign Institutional
Investors
Mutual Funds and UTI
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d) Manpower As per Press Information Bureau, Govt. of India category-wise regular
manpower strength in BHEL
Executives 25%
Supervisors 20%
Workers/others 55%
Total 100%
The total headcount in the PSU is 49,300
Turnover per Employee (in INR Crore)
e) Products of BHEL (Focusing on boilers and Auxiliaries)
Boilers
• Steam generators for utilities, ranging from 30 to 500MW capacity, using coal,
lignite, oil, natural gas or a combination of these fuels: capability to manufacture
boilers with super critical parameters up to 1000 MW unit size.
• Steam generators for industrial applications, ranging from 40 to 450t/hour capacity
using coal, natural gas, industrial gases, biomass, lignite, oil, bagasse or a
combination of these fuels.
• Pulverized fuel fired boilers.
• Stoker boilers.
• Atmospheric fluidized bed combustion boilers.
0.440.48
0.61
0.74
0.930.89
0
0.2
0.4
0.6
0.8
1
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Turnover per Employee (in INR Cr.)
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• Circulating fluidized bed combustion boilers.
• Waste heat recovery boilers.
• Chemical recovery boilers for paper industry, ranging from capacity of 100 to 1000
t/day of dry solids.
• Pressure vessels.
Boiler Auxiliaries
Fan Axial reaction fans of single stage and double stage for clean
air application, with capacity ranging from 25 to 800m3/s and
pressure ranging from 120 to 1,480 m of gas column.
Air Pre-heater Ljungstrom rotary regenerative air-pre-heaters for boiler and
process furnaces.
Large regenerative air-preheaters for utilities of capacity up
to 1000 MW.
Gravimetric Feeders
Pulverisers Bowl mills of slow and medium speed of capacity up to 100
t/hour
Tube mills for pulverizing low-grade coal with high-ash
content.
Pulse Jet and Reverse Air Type Fabric Filters (Bag Filters)
Electrostatic Precipitators Electrostatic precipitators of any capacity with efficiency up
to 99.9% for utility and industrial applications
Mechanical Separators
Soot Blowers Long retractable soot blowers (travel up to 12.2m), wall
deslaggers, rotary blowers and temperature probes and related
control panels operating on pneumatic, electric or manual
mode.
Swivel arm type soot blowers for regenerative air-preheaters.
Valves High-pressure and low-pressure bypass valves for utilities.
High and medium-pressure valves, cast and forged steel
valves of gate, globe, non-return (swing-check and piston lift-
check) types for steam, oil and gas duties up to 600 mm
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diameter, 250 kg/cm2 pressure and 540oC temperature.
Heat Exchangers and
Pressure Vessels
Air-cooled heat exchangers
Surface condensers.
Steam jet air ejectors
Columns
Reactors, Drums
LPG/ Propane Storage Bullets
LPG/ Propane Store Mounded Vessels
Feed Water Heaters
f) BHEL Utility units (up to 2012)-
62% of Total Installed Capacity of India is contributed by BHEL Utility Sets
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4.1.2 Turnover, Order Book & Expenditure in R&D
a) Annual Turnover (in INR Crore)
b) Order Book (in INR Crores)
28033
34154
43337
49510 50015
0
10000
20000
30000
40000
50000
60000
2008-09 2009-10 2010-11 2011-12 2012-13
2008-09 2009-10 2010-11 2011-12 2012-13
59678 59037 60507
22096
31528
0
10000
20000
30000
40000
50000
60000
70000
2008-09 2009-10 2010-11 2011-12 2012-13
2008-09 2009-10 2010-11 2011-12 2012-13
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c) Performance up to Q2FY13
Sl. No. INR Crore H1FY13
(A)
H1FY12
(B)
H1FY12*
(C)
% Growth
(A/C)
1 Turnover 19,750 18,189 18,189 8.6%
2 PBT 3,123 3,163 2,997 4.2*
3 PAT 2,195 2,228 2,115 3.8%
4 Project
Commissioned
(MW)
3,505 3,025 3,025 16%
5 Order Book
(MW)
4,393 3,777 3,777 16%
*Total order outstanding as on 30.09.12: INR 1,22,300 Crore
d) Order Book H1 FY13
Sector Power Industry Exports Total
MW 3380 23 990 4393
INR Crores 5739 2049 975 8717
Major Orders Received
• 1X500 MW TG & SG Package from NTPC Vindyachal
• 2X660MW Package for DVC Raghunathpur
• 160MW BTG Package from RRVUNL Ramgarh CCPP Stage IV
• ESP Package for NTPC Mauda and Sholapur Projects
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e) Performance of the BHEL Plants (Source: CEA Review of Performance of Thermal
power Stations 2010-11)
f) Expenditure towards Research & Development
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4.1.3 Consultants, Collaborations and Certifications
a) BHEL Technological Collaborations
Sl.
No.
Equipment Technology Partner Coverage
1 Supercritical Boiler Alstom, USA 500 – 1000MW
2 Supercritical
Turbine Generator
Siemens (SAG) Germany 660 – 1000MW
3 Pumps MHI, Japan Up to 1200MW
4 Fans TLT, Germany
b) BHEL experience with Consultants
� DESIN, New Delhi
� MECON, Ranchi
� Development Consultants, Calcutta
� M.N. Dastur & Co. Ltd., Calcutta / Chennai
� Engineers India Ltd., New Delhi
� Tata Consulting Engineers, Bangalore
c) BHEL’s Supercritical Market in India
Supercritical Domain
• Introduced Supercritical Technology with technology tie-ups with Alstom
(Boiler), Siemens (TG) & MHI (Pumps)
• Rapid Technology Absorption in Partnerships with Customers
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Supercritical Orders’ basket 18 TGs and 18 SGs:
Sl. No. Project Rating
(in MW)
Customer Scope Ordering Route
1 Barh 2X660 NTPC SG & TG ICB
2 Bara 3X660 PPGCL SG & TG ICB Outbidding
L&T
3 Krishnapatna
m
2X800 APPDCL SG ICB Outbidding
L&T
4 Yermarus 2X800 RPCL EPC Excluding
AHP & CHP
JV Route
5 Edlapur 1X800 RPCL SG & TG JV Route
6 Bellary 1X700 KPCL EPC ICB Outbidding
L&T
7 Lalitpur 3x660 Bajaj
Hindustan
SG & TG ICB Outbidding
Alstom
8 Mouda 2x660 NTPC TG ICB
9 Raghunathpur 2x660 DVC TG ---
10 Singrauli 2x660 DB Power SG & TG ----
4.1.4 BHEL and Alstom Historical Agreement (dated. - 27 Oct 2005)
� BHEL became the first Indian company capable of manufacturing
Supercritical Boilers
� Bharat Heavy Electricals Limited (BHEL) entered into a Technology Transfer
Agreement with Alstom for design and manufacture of large-size Supercritical
32 | P a g e
Once-Through Boilers to gain access to Supercritical Technology, hitherto the
domain of leading players, thereby enabling it to enlarge its product range.
� The Agreement with Alstom - an internationally reputed technology leader in
Once-Through Boilers, includes transfer of state-of-the-art technology to
BHEL for any size of Once-Through Boilers and associated Coal Pulverisers.
During the period of the Agreement, Alstom will provide training to BHEL
engineers as well as support in the
design, engineering,
manufacturing, assembly, testing,
erection, commissioning, repair,
retrofit and up gradation of the
boilers.
� Presided over by Mr. Sontosh
Mohan Dev, Union Minister of
State for HI&PE(Independent Charge), the agreement was signed in New
Delhi, by Mr. AK Puri, CMD, BHEL and Mr. Patrick Kron, Chairman &
Chief Executive, Alstom.
4.1.5 ALSTOM
a) Presence
33 | P a g e
KEY DATA
· More than 8,000 Employees in India
· 4 R&D Centres in Bangalore (Transport),Vadodara (Power) and Hosur &
Padappai(Grid)
· 2 Engineering Centres for Power in Noida, Kolkata
· Manufacturing Units
• Power - Vadodara, Durgapur, Shahabad, Gujarat
• Transport – Coimbatore, Sricity
• Grid - Padappai, Pallavaram, Hosur, Vadodara, Naini
b) Partnerships
Alstom in India has made strategic partnerships with strong local players to bring in
frontline technologies and enhance the quality and efficiency of its products:
• Alstom and Druk Green Power Corporation in 2011- The JV will set up a
hydropower service centre in Bhutan to provide repair services for hydro runners
and other underwater parts of hydropower plants
• Alstom and Bharat Forge Ltd. JV in 2009- The JV will manufacture steam
turbines and auxiliary equipment with an annual capacity of 5000 MW
c) Thermal Power Experience in India
Alstom’s Steam business in India designs, engineers and constructs turnkey steam
power plants in addition to offering a range of products such as boilers, generators, air
quality control systems and CO2 capture & storage technologies.
Refernces
· STCMS – Neyveli ‘0’, 1 x 250 MW Lignite Fired Power Plant full turnkey – 2002
· CSEB – Korba – 4x 50 MW R&M - 2007
Ongoing Projects
• NTPC – Barh II – Supercritical Boilers – 2 x 660 MW - under execution*
34 | P a g e
• APGENCO – Krishnapatnam - Supercritical Boilers – 2 x 800 MW - under
execution*
• Jay Pee - Bara - Supercritical Boilers – 3 x 660 MW - under execution*
• NTPC – Mouda - Supercritical Boilers – 2 x 660 MW - under execution*
• NTPC – Solapur Supercritical Steam Turbine Islands - 2 X 660 MW – under
execution
• NTPC – Nabinagar Supercritical Steam Turbine Islands and Boilers* – 3 X 660
MW - under execution
• BHEL – Gadarwara Super Thermal Power Plant* - 2 X 800 MW – under
execution
* Through our technology licensee, BHEL
4.1.6 Technical Aspects of Alstom Boilers
Types of ALSTOM BOILERS
ALSTOM offers an extensive range of boilers and firing systems.
• Pulverised coal tower type boiler: Suitable for all types of coal, especially to
reduce potential erosion from high ash coals
• Pulverised coal two pass boiler: the most widely used design in the world, offering
lower maximum heights and potential for quicker build time
• Circulating fluidised bed (CFB): the fuel-flexible solution, burning low-grade
fuels at high efficiency with low emissions
• Gas and oil-fired boilers: using the latest technology and Alstom expertise for
efficient, reliable and eco-friendly solutions
• Firing systems: burn a wide range of fuels, reduce your emission levels and
maintain excellent availability and reliability
35 | P a g e
5 Expansion and Future Plan
a) Manufacturing Capacity Expansion of BHEL
b) Some Trend Setting Steps to Accelerate Project Execution
Vendor Base 766 new Vendors added in 2011‐12 & Vendor base is more than
20,000.
Expansion Procurement Office opened in Shanghai, China
AMA Advanced Manufacturing Action for long lead items
TCA Technology Collaboration Agreement with Sheffield Forgemasters
UK for large size forgings (up to 1000 MW)
IT e‐Procurement , Reverse Auction (~32%)
Rate Contracts Long term Rate Contracts for Steel, Copper, CRGO, Transformer
Oil
(contribution to total purchase ~20%)
Outsourcing Enhanced thrust is being given for outsourcing of low tech/
non‐core
manufacturing
ACF ‘Away Center Fabrication’ adopted by Trichy & Ranipet Units
36 | P a g e
c) Strategic Plan for 2012-17
6 SWOT Analysis of BHEL
Strength Argument
Low cost producer of quality
equipments due to cheap labor and
fully depreciated plants.
• Distributed manufacturing facilities
• More numbers of ancillary set ups around the
plant to provide readymade raw materials
• Secured job attracts more labors
• Economies of scale
Flexible manufacturing set up • Capacity to produce equipment up to 20000
MW
• Produces wide range (capacity) of products
Large number of vendors to select
from
• Has more than 20,000 approved vendors for
different types of raw materials which are
selected through strict appraisal process giving
quality the top priority
• Vendors are selected through bidding process
ensuring transparency in selection
37 | P a g e
Strength Argument
Comprehensive turnkey experience
from product design to commissioning.
• Has been operating as the only indigenous
power plant equipment manufacturer since
1964 to 2007
• Employees with highest level of experience in
Power Plant Equipment manufacturer are
available in BHEL with knowledge of
equipment design and commissioning
Large committed and skilled
workforce
Total of 49,000(approx.) work force is available
resulting greater division of work hence more
specialization
Relatively stable industrial relationship Being the only Govt. utility and the oldest in the
country in producing Power Plant Equipment, it
enjoys a healthy and long term relationship with
the industry
Access to contemporary technologies
with back up support from renowned
collaborations.
Technology transfer for Supercritical Boilers from
ALSTOM to BHEL and consultancy services from
International Consultants has given it the edge to
outperform from its competitors.
Fully equipped to take capital
maintenance and servicing of power
plants.
Having the good track record of experience BHEL
is a good choice for maintenance and servicing
activities of power plants as most of the plants are
having equipments designed and commissioned by
BHEL.
(Refer CEA, Annual Report on Performance of
Thermal Power Plant)
Large share of domestic business in
power industry.
69% of the Utility generating power are supplied
with BHEL equipments
Renovation and Modernization of old
plants.
CEA has exclusive provision for BHEL to
renovate and modernize plants which were
supplied with BHEL equipments for BTG package
Regional centers for services for easy Almost all the state capitals are having BHEL
38 | P a g e
Strength Argument
access to customers.
customer service centers for greater interaction
with customers (so greater customer reach)
Sound financial position in terms of
profitability and solvency
Refer BHEL Balance sheet
Low debt equity ratio (even lower than
0.5:1) for many years, enabling
company to raise capital.
Refer BHEL Balance sheet
The company has 180 products under
30 major product groups that
This caters to the needs of the core sector like
power, industry, transmission, transportation,
defence, telecommunications and oil business.
BHEL's ability to acquire modern
technology and make it suitable to
Indian conditions
Strong relationship with NTPC NTPC is planning a capacity expansion of Rs. 52
bn and based on the past, 85% of NTPC projects
have been bagged by BHEL. The company also
enjoys purchase price preference.
Huge investment in R&D Merger &
Acquisition
The company has taken over the Management &
Control of Bharat Pumps & Compressors Ltd and
completely taken over M/s- Bharat Heavy Plate &
Vessels Ltd
Weakness
• High working capital requirement due to its exposure to cash starved State
Electricity Boards.
• Inability to provide project financing.
• Difficulties in keeping the commitments on product delivery and desired sequence
of supply.
• Longer delivery cycle in comparison with International Suppliers of similar
equipments.
39 | P a g e
• Inability to provide supplier’s credit, soft loans for financing of power project.
• Inadequate banking infrastructure.
• PSU status is a big weakness for BHEL as it is subject to their rules and
regulations and is forced to carry a huge amount of labor force, which it is not
able to retrench.
• The company is vertically integrated, which could have been avoided by
outsourcing its components for power generation and transmission. This could
have reduced the cost.
Opportunities
• High growth forecast in India’s index of industrial production would increase
demand for industrial equipment such as motors and compressors.
• Growing number of old plants (>25 Years) will provide a good market for R&M
of Thermal Power Plants.
• Private sector power plant to offer expanded market as utilities suffer resource
crunch.
• Export opportunities
• Easy processing of ventures/ collaborations/ imports/ acquisition of new
technology.
Threats
• Technical suppliers are becoming competitors with the opening up of the Indian
company.
• Fall in global power equipment prices can affect profitably.
• Reduced number coal block allocations.
• Multilateral agencies reluctant to lend to power sector because of poor financial
management by State Electricity Boards.
• Private sector power companies may give order to low cost bidder (Chinese
Bidder) compromising with quality aspect.
40 | P a g e
Strategies learnt from BHEL
i. Technological Strategy
BHEL is the leader company to provide a technology to the various products. The two
ways of adopting technological strategies are:
• Acquiring technology & making product out of it through licensing.
• Developing own technology.
ii. Development Strategy
BHEL is amongst the highest investors in Research and Development in the country.
The R&D efforts have made significant contributions to almost all areas of operation
of BHEL; a few among them are: Research and Development Strategy. The ways of
adapting the strategies are:
• Upgrading its product engineering and manufacturing technology base by
induction of state-of-the-art technologies.
• Upgrading equipment and facilities to maintain quality leadership.
iii. Vendor Development
Global meeting of about 200 vendors is being held at Hardwar
iv. Flexible Manufacturing Technology
It mainly refers to production of a wide range of products without changing or with a
little change in the current technology and manufacturing facility. It advantages will
be
• Idle Time Reduction
• Optimum level of inventory
• Increase in productivity with an underlying strategy of maximising profits
through lowering unit costs
41 | P a g e
4.2 DOOSAN HEAVY INDUSTRIES & CONSTRUCTION CO. LTD.
42 | P a g e
1. About Doosan Group
Doosan Group is a South Korean conglomerate company. In 2009, the company was placed
471st in the Fortune Global 500. It has been included in the Forbes Global 2000 companies
from 2007. It is the parent company of ŠKODA power. Doosan was ranked 4th among the
“World’s Best 40 Companies 2009” list, released in BusinessWeek, the U.S. economics
magazine in October 2009, Fortune Global 500.
a) History
The Doosan Group, founded in 1896. The company began as the Park Seung Jik Store in
1896 in Baeogai (now Jongno 4-ga, Seoul). Since then, Doosan has developed into a
multinational conglomerate, with particular emphasis on consumer goods, manufacturing and
the trading and construction sectors.
The company's acquisitions include Doosan Heavy Industries & Construction (formerly
Korea Heavy Industries and Construction, a heavy industry company specializing in power
and desalination plants) in 2001, Koryeo Industrial Development in 2004 and Doosan
Infracore (formerly Daewoo Heavy Industries & Machinery, a company specializing in
construction machinery) in 2005.
In 2006, Doosan acquired the boiler engineering company Mitsui Babcock UK (renamed
Doosan Babcock) and Kvaerner IMGB, the largest casting and forging company in Romania.
In 2007, Doosan acquired the construction machinery company Bobcat USA, the world’s
largest supplier of small construction equipment. Post-acquisition of Bobcat USA into
Doosan Infracore, one of the Doosan Group’s subsidiary companies specializing in medium
and large construction machinery, the Doosan Group became the world’s seventh largest
supplier of construction machinery. Doosan currently has 43,000 employees in 38 countries.
Key Business Areas
Doosan’s core businesses are based on ISB (Infrastructure Support Business). Doosan’s
Infrastructure Support Businesses are made up of many subsidiaries
43 | P a g e
Doosan Group Hierarchy
b) Global Presence
Doosan Group
Doosan Corporation
Doosan Infracore
Doosan Heavy Industries
Doosan Power Systems
Doosan Babcock (UK)
Skoda Power (Czech)
Doosan Mecatec
Doosan Industrial Development
Doosan Engine
44 | P a g e
c) Credentials
d) Doosan Companies and Business Lines
Doosan Affiliate
Companies
Business Lines
Doosan Corporation • Trading (Export & Import Services, Import Products
Sales
• Consumables (Liquor, Food, Fashion, Publishing,
Magazine, Shopping Mall)
• Electro-Materials (Copper-clad laminates for Printed
Circuit Boards)
• Packaging Materials (Glass Tableware, Crystals, PET
bottles, Can)
• IT (Solution Service, Data Center, ISP Service)
• R&D Center (Liquor, Food)
Doosan Heavy Industries • Thermal Power Plant (EPC, Boiler, T/G, HRSG, BOP)
45 | P a g e
Doosan Affiliate
Companies
Business Lines
and Construction Limited • Nuclear Power Plant (NSSS, Peripheral Systems, BOP)
• Material Handling Equipments (Port Cranes, Ship
Unloader, Stacker & Reclaimer, Conveyor System
• Casting & Forgings (Power Facilities, Marine Engine
Parts, Mill Steel, Die & Tool Steel)
• Desalination (MSF, MED, RO, Hydro-MSF/RO)
• Construction (Plants, Civil Works, Architecture Works)
• Doosan Babcock (Advanced Boiler Technology-High
Efficiency & Cleaner Coal)
Doosan Engine Co., Ltd Marine Engines, Diesel Power Plant
Doosan Mecatec Chemical Process Equipments, Steel Bridge, General Steel
Fabrication
Doosan Infracore Co.,
Ltd
Construction Equipment, Machine Tools & Automation Systems,
Diesel Engines & Materials, Military Industry
Doosan Construction Co.,
Ltd
Civil & Architecture Works
e) Doosan Heavy Industries & Construction Co. Ltd.
Doosan Heavy Industries & Construction Co., Ltd., a subsidiary of Doosan Group, is one
of the largest Korean heavy industrial companies. Established in 1962, it is located in the
southern city of Changwon with an area of 4.5 million m². Its business ranges from nuclear
power plants, thermal power plants, turbines and generators, to desalination plants, castings,
forgings and construction. The company has completed a number of major power and water
projects worldwide.
History
• 1962 Founded as Korea Heavy Industries and Construction Co., Ltd.
• 1999 Integrated with several other domestic power industries
• 2000 Became public and was listed on Korean stock market
46 | P a g e
• 2001 Renamed Doosan Heavy Industries & Construction. Ranked first in global desalination
market and selected as "Global Product"
• 2006 Acquired Kvaerner IMGB (Currently Doosan IMGB) and Mitsui Babcock (Currently
Doosan Babcock). Established water R&D centers in Dubai (UAE) and Tampa, Florida
(USA)
• 2007 Began construction of the Doosan VINA plant (Vietnam)
• 2009 Acquired Czech-based power systems maker Skoda Power. Doosan VINA plant
completed
• 2011 Acquired AE&E Chennai Works (Currently Doosan Chennai Works), a boiler maker in
India
f) Shareholding Pattern of Doosan Heavy Industries & Construction
g) Production Capability
Doosan Corp.
and Related
parties
41%
Local
Investors
30%
Foreign
Investors
13%
Treasury
Stocks
16%
Wind
Boiler
Generator
Turbine
HRSG
Nuclear
Forging
216
7500
8300
8000
15720
1500
9300
Production Capability (in MWe)
Wind Boiler Generator Turbine HRSG Nuclear Forging
47 | P a g e
h) Manufacturing Facilities
2. Turnover, Order Book & Expenditure of Doosan heavy Industries &
Construction Co. Ltd.
I. Sales
48 | P a g e
II. Generating Capacity( in 2011)
119 GW
III. Contribution of Power to Doosan heavy Industries & Construction Co. Ltd.
• Revenue: New power
generation business is major
contributor. The power
division accounted for 59% of
total revenue in FY12, while
industrial products (mainly
for water systems) accounted
for 11%, casting & forging
products 10%, and
construction 6%. Revenues
from DPS and other
businesses account for 18%.
• Orders: Led by power
generation segment. Orders
from the power generation
segment accounted for 38%
from 86% in FY11. Industrial
products accounted for 21%,
casting & forging products
10%, and construction 8%.
Orders from DPS and other
businesses accounted for
23%.
• Power is key earnings contributor. In FY12, the power generation division
accounted for 84% of operating profit and registered 10% OP margin. Industrial
products barely broke even level and did not contribute to earnings. The construction
division posted negative 7% OP margin and contributed losses.
49 | P a g e
IV. Power Division Revenues, Orders
3. Collaborations
Technological Collaborations
50 | P a g e
4. Technical Aspects of Doosan Boilers
a) Doosan Boiler Technology History
Doosan SC/ USC Advantage
51 | P a g e
Sipat Supercritical Power Project
Sl.No. Items Make/ Parameters
1 Boiler package Supplier Doosan Heavy Industries, South Korea
2 Turbine Package Supplier Power Machines, Russia
3 600MW Boiler Type Once through Supercritical, Two Pass, Balanced
Draft, Outdoor
4 Furnace Dimension Width- 18816mt, Depth-18144mt., Volume-
21462m3
5 Super heater Multistage with panel, Platen Pendant Section
6 Reheater Multistage Type (LTRH & Final RH)
7 Steam Output parameters at
BMCR
7.1 Main Steam 256ksc, 5400C, 2225 T/hr
7.2 Reheat Steam 48.3ksc, 5680C, 1742 T/hr
8 Design Coal Flow 438 T/hr.
9 Boiler Auxiliaries
9.1 Fans
9.1.1 ID Fan Supplier: FlaktWoods, Sweden
Type: PFSU-450-300-08
9.1.2 FD Fan Supplier: FlaktWoods, Sweden
Type: PFSU-280-112-04
9.1.3 PA Fan Supplier: FlaktWoods, Sweden
Type: PFTU-200-100-02
9.2 Air Preheaters
9.2.1 SAPH Supplier: Doosan
Type: 31.5-VI-1900
9.2.2 PAPH Supplier: Doosan
Type: 26.0-VI-1800
10 Mills Vertical Bowl Mill 10Nos.- XHPS 1103
10.1 Coal Feeder Gravimetric Feeder 10Nos.- 36 inches
11 Boiler Recirculation Pump Make: Hayward Taylor, England
52 | P a g e
Sl.No. Items Make/ Parameters
(BRP) Type: Wet Stator, Glandless, single Section Sing
Discharge Pump
12 Oil Elevations 5 Nos.(AB, CD, EF, GH & JK)
13 Turbine
13.1 Turbine Model K-660-247 (LMZ, Russia)
13.2 HP Turbine 1 No. HP Turbine, 17 Stages
HP turbine has nozzle governing system
2 Nos. HP Stop valves, 4 nos. HP Control
Valves
1 Impulse Stage + 16 Reaction Stages
13.3 IP Turbine 1 No. of IP Turbine, 11X2 Stages
IP Turbine has throttle governing system
2 Nos. of IP Stop Valves, 4 Nos. IP Control
Valves
22 Nos. of Impulse stages
13.4 LP Turbine 2 Nos. of LP Turbines, (5X2 + 5X2) Stages
20 Nos. Impulse Stages
13.5 Number of Journal Bearing for
Turbine
8
13.6 Number of Journal Bearing for
Generator
4
13.7 Steam Turbine Parameters Before HPSV: 247 ksc, 5370C, 2023 T/hr
Before IPSV: 43ksc, 5650C, 1681 T/hr
14 Number of HP Heaters 6
15 Number of LP Heaters 4
16 Boiler Efficiency 86.27%
17 Turbine Efficiency 45.26%
18 Turbine Heat Rate 1904 Kcal/ KWH
19 Unit Heat Rate 2207 Kcal/ KWH
20 Unit Efficiency 38.96%
53 | P a g e
Boiler parameters for 660MW Power Plant of Doosan (Sliding Pressure Operation)
Unit 100%
BMCR
100%
TMCR
80%
TMCR
50%
TMCR
Both HP
Htrs out
of
Operation
60%
BMCR
(One
Stream)
SH System
Steam Flow at SHO T/Hr 2225 2023.75 1572.47 963.76 1839.5 1335
Steam Pressure at
SHO
Kg/cm2(a) 256 254.45 238.01 151.25 252.92 204.4
Steam temp. at SHO deg. C 540 540 540 540 540 540
RH System
Steam Flow T/Hr 1741.8
2
1678.37 1328.96 836.41 1784.2 1138
Steam Pressure at
RHI
Kg/cm2(a) 48.3 46.7 37.2 23.6 50.5 32.2
Steam Temperature
at RHO
deg. C 568 568 568 568 568 568
Steam Temperature
at RHI
deg. C 299 296 281 289 309 284
Pressure Drop across
RH
Kg/cm2 1.69 1.62 1.3 0.88 1.7 1.16
Feed Water Temp deg. C 289.64 286.23 270.35 244.34 196.15 261
Steam Temperature
Control range
% _______________100% BMCR to 50%
TMCR_________________
SWOT Analysis of Doosan Heavy Industries
Strengths
• Strong international presence. • Presence in fast growing markets. • High net cash position. • Technology sufficient • Vertical integration • Co-operation with largest
Weakness
• Instability in revenue. • Large dependence on energy sector
(EPC projects).
54 | P a g e
international technological providers • Leader in the local market and
important regional player.
Opportunity
• Fast growth in energy markets in Balkan peninsula and in the MENA region and especially in Turkey.
• Massive need for energy infrastructure projects.
• Replacement of old capacity with highly efficient lignite fired plants by PPC.
• Entry to new markets, such as Africa, India.
Threats
• Delays in licenses of domestic projects.
• Global competition can hurt EBITDA.
INVESTMENT RISKS –
• Liquidity Risk: The risk is low due to the high net cash position of the company and
the fact that its customers are financially strong.
• Interest Rate Risk: This risk is trivial due to very low debt.
• Credit Risk: Low risk because of a high dispersion of its customers.
• Currency Risk: High risk in the last few years due to the expansion abroad.
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4.3 L&T MHI BOILERS PVT. LTD.
56 | P a g e
1. About L&T MHI
L&T-MHI Boilers Private Limited is a 51:49 Joint Venture Company formed on 16th April,
2007 in India between Larsen & Toubro Limited (L&T), India and Mitsubishi Heavy
Industries Limited (MHI), Japan for engaging in the business of design, engineering,
manufacturing, selling, maintenance and servicing of Supercritical Boilers and Pulverisers in
India.
The Company has established manufacturing facility that can manufacture pressure parts and
pulverisers at Hazira, near Surat in the state of Gujarat with the technological support from
Mitsubishi Heavy Industries Limited.
a) Joint Venture of L&T and MHI
JV signed on - 16th April, 2007
License- Exclusive in India and Non Exclusive outside India
Term- 20 Years
Training- 1400 Man days (280 Man Weeks)
Structure of JV
Complete Technology transfer of Supercritical boilers to Joint Venture
Supercritical Boilers for 660/700 MW, 800/840 MW, 1000/1050 MW
Pulverisers- MVM 28/32/34
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Capacity- 4000 MW per Annum
Pressure Parts- 30000 Tonnes per Annum
Starting of manufacturing- 25th June 2010
b) Scope of L&T MHI
c) Products of L&T MHI
• Supercritical boilers of 500 MW and above range
• SH & RH temperature up to 605 degrees Celsius
• Low NOx burners (A-PM) as standard
• Two pass design with divided back pass
• Front and side mill arrangements
• Vertical wall as standard
• Spiral wall can also be offered
Scope of JV
Engineering & Designing
Procurement
Manufacturing
Installation
Commissioning
After Sale Services
Quality & Safety
Marketing
58 | P a g e
d) Project and Site Locations
e) Projects Under Execution
Jaypee Nigrie (2X660 MW)
MAHAGENCO Koradi (3X660 MW)
PSEB Rajpura (2X700 MW)
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f) Accreditations
• ISO 9001:2008certification, approved by Lloyd’s Register Quality Assurance.
• OHSAS 18001:2007certified by Bureau Veritasfor Occupational Health and
Safety Management system.
• ISMS 27001:2005for Information Security Manasgement System.
• ASMECertificate of Authorization for S, PP, Uand R designators
• ISO 14001:2004certified by Bureau Veritasfor Environmental Management
System.
Sr. No. FEATURES MERITS
A FURNACE WALL
Vertical wall construction as standard
MHI has largest number of sliding
pressure vertical wall supercritical units
in operation
Rifled tube construction In high heat
flux zone
Easier manufacturing and simpler construction
Low mass flux compared to spiral wall and
hence lesser pressure drop
Lesser field joints
Less slag accumulation
Less thermal stresses
Simpler supporting arrangement
B FIRING ARRANGEMENT
Circular corner firing (CCF) with twin
fire vortex as standard
Less steam temperature imbalance between left
and right leads
Uniform heat flux in the furnace
Less burner heat input
C COAL FIRING SYSTEM
Use of MACT (Mitsubishi Advanced
Combustion Technology) with APM
(Advanced Pollution Minimum) burner
and additional air port
High ignition ability under low O2 condition
Reduced NOx emmisions
Reduced unburn carbon loss
Low excess air (15%) increases boiler
efficiency
60 | P a g e
Sr. No. FEATURES MERITS
D R H TEMPERATURE CONTROL
Use of gas biasing damper in the second
pass as primary control
Additional tilting mechanism for burners
as a secondary control
Interstage attemperation as emergency
control
Pressure control of RH temperature is achieved
No RH spray under steady state operation
E SUPERHEATER CONFIGURATION
Use of three stage superheater
Use of inter stage attemperation
Better SH steam temperature control
F USE OF ADVANCED RELIABLE MATERIALS FOR HIGH TEMPERATURE
APPLICATIONS
CC2328 (SA213 UNS S30432) in SH &
RH applications
Above material has been devloped by
MHI in collaboration with tube
manufacturers for supercritical and ultra
supercritical boilers
Non-usage of T91 materials in heating
zone
Better creep properties
Reduced steam oxidation leading to higher
availability as compared to T91 materials
Pulverisers
Mill Offerings
MVM28, 32 and 34
Fixed/Rotary separators
Ceramic embedded liners for Roller & Table
Gearbox with thrust pad design
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Features & Merits of Pulverisers
Sr No. Features Merits
A Capacity
Large capacity Pulverizers Less number of mills per Boiler unit
High Reliability and low maintenance
B Liners for Griding Table & Roller
Ceramic inserts type Suitable for Indian coals
Improved wear life (upto 8000 Hrs)
C Roller Loading System
Hydraulic loading Suitable for various coal types
Low vibration
D Roller Tilting Device
Hydraulic control Ease in maintenance
Techno economic Comparision – Subcritical Vs Supercritical Vs Ultra Supercritical for
MHI
Capacity: 700 MW Calculation with 90% PLF
Fuel: Indian Coal with 42% Ash
Fuel GCV: 3300 Kcal/Kg
Description Unit
Subcritical
16.7 M pa
538/538
deg.c
Supercritical
24.1 M pa
566/593 deg.c
Ultra
Supercritical
24.1 M pa
600/600
deg.c
Reducti
on
Sub Vs
SC
Reductio
n
Sub Vs
USC
Turbine Heat kCal / 1918 1838 1814 80(4.2% 104(5.5%
62 | P a g e
Description Unit
Subcritical
16.7 M pa
538/538
deg.c
Supercritical
24.1 M pa
566/593 deg.c
Ultra
Supercritical
24.1 M pa
600/600
deg.c
Reducti
on
Sub Vs
SC
Reductio
n
Sub Vs
USC
rate kWh ) )
Boiler
efficiency % 87% 87% 87% 0 0
Plant heat
rate
kCal /
kWh 2207 2113 2085
94(4.2%
)
121(5.5%
)
Coal
consumption
MM
T/Annum 3.676 3.524 3.477
0.152(4.
2%)
0.199
(5.5%)
Ash
Generation
MM
T/Annum 1.544 1.48 1.46
0.064(4.
2%)
0.084
(5.5%)
CO2 MM
T/Annum 7.278 6.981 6.888
0.297(4.
2%)
0.39
(5.5%)
SOx MM
T/Annum 0.023 0.0221 0.0218
0.0009(
4.2%)
0.0012
(5.5%)
Tube Material of Supercritical Boilers for MHI
63 | P a g e
MHI Reference List of Ultra Supercritical boilers
Customer
Station
MW Steam
Condition
(0C)
Fuel C/O
Soma Joint
EPCO Shinchi #2
1,000 538/566 Coal 1995
Tohoku EPCO
Haramachi #1
1,000 566/593 Coal 1997
Chugoku EPCO
Misumi #1
1,000 600/600 Coal 1998
Hokuriku EPCO
Tsuruga #2
700 593/593 Coal 2000
Kyusyu EPCO
Reihoku #2
700 593/593 Coal 2003
Kansai EPCO
Maizuru #1
900 595/595 Coal 2004
Tokyo EPCO
Hirono #5
600 600/600 Coal 2004
China Yuhuan (4
units)
Licenser
1,000 600/600 Coal 2006
China Taizhou (2
units)
Licenser
1,000 600/600 Coal 2007
PJ in China (15
units)
Licenser
600, 660 600/600 Coal 2007~
China Jinling (1
units)
Licenser
1,000 600/600 Coal 2009
64 | P a g e
4.4 COMPARISON OF BHEL, DOOSAN HEAVY INDUSTRIES AND
L&T MHI BOILERS
Shareholding Pattern
BHEL Doosan Heavy Industries L&T MHI Boilers
President of India- 67.72% Doosan Corporation and RelatedParties- 41%
L&T-51%
Foreign Institutional Investors- 13.49%
Local Investors- 30% MHI-49%
Mutual Funds and UTI- 1.44%
Foreign Investors- 13%
Banks, Financial institutions insurance Companies-11.40%
Treasury Stocks- 16%
Others-5.95%
Production Capacity in India
BHEL Doosan Heavy Industries L&T MHI Boilers Pvt. Ltd.
Upto 20,000MW Upto 2100MW Upto 4000MW per anuum
Order Book for 2012
BHEL Doosan Heavy Industries L&T MHI Boilers Pvt. Ltd.
Rs. 22096 Crores 9,000, 000KRW million
Technological Collaborations
BHEL Doosan Heavy
Industries
L&T MHI Boilers Pvt.
Ltd.
Supercritical Boiler Alstom, USA Babcock (Acquired) JV with MHI
Supercritical
Turbine Generator
Siemens (SAG)
Germany
Gas Turbine technology
and manufacturing
through MHI license
Pumps MHI, Japan
Fans TLT, Germany
65 | P a g e
Pressure part Material
BHEL Doosan Heavy
Industries
Furnace Wall Tubes SA-213 T22
SH Platen
Assemblies
SA-213 TP347H
Finishing RH
Assemblies
SA-213 TP347H
SA-213 S304H
Shot Blasted Super 304H/ HR3C
Finishing SH Front
Assemblies
SA-213 T91
Finishing SH Rear
Assemblies
SA-213 TP347H
Low Temperature
Reheater
SA-213 T91
SA-213 T23
SA-213 T12
SA-213 T91
SA-213 T22
SA-213 T12
Economizer SA-210C SA-213 T1a
Separator SA-335 P91 Header SH Outlet SA-335 P92 Header RH Outlet SA-335 P122
Types of Supercritical Coal Fired Boiler
BHEL Doosan Heavy Industries L&T MHI Boilers Pvt. Ltd.
Pulverised Coal Tower Type One Pass Type Vertical Water Wall Pulverised Coal Two Pass Two Pass Type
Tangential firing system and
Integrated lignite T-firing
system
66 | P a g e
4.5 FORECAST BY BHEL AND DOOSAN
Forecast by BHEL
05000
10000150002000025000300003500040000
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Doosan 0 0 0 3000 3000 3000
BGR-Hitachi 0 0 3000 3000 3000 3000
Ansaldo Gammon 0 0 0 2000 2000 2000
Alstom/Bharat Forge 0 5000 5000 5000 5000 5000
Toshiba 3000 3000 3000 3000 3000 3000
L&T/MHI 5000 6000 6000 6000 6000 6000
BHEL 10020 13020 13020 13020 13020 13020
All
Fig
ure
s in
MW
FORECAST OF BHEL FOR TG
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Doosan 0 0 0 3000 3000 3000
BGR/Hitachi 0 0 3000 3000 3000 3000
Cethar/Riley 0 0 0 4000 4000 4000
Thermax/Babcock 0 0 0 3000 3000 3000
Ansaldo Gammon 0 0 0 4000 4000 4000
L&T/MHI 5000 6000 6000 6000 6000 6000
BHEL 12500 17500 17500 17500 17500 17500
05000
1000015000200002500030000350004000045000
All
Fig
ure
s in
MW
FORECAST OF BHEL FOR SG
67 | P a g e
Forecast By Doosan Heavy Industries
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5. STRATEGIC EVALUATION OF
L&T MHI BOILERS PVT. LTD.
5.1 Principles of Strategic Management
5.2 Strategy of major power equipment manufacturers
5.3 TWOS Matrix and Formulation of SO, WO, ST & WT Strategies
5.4 EFE Matrix and IPE Matrix
5.5 SPACE Matrix Analysis
69 | P a g e
5.1 PRINCIPLES OF STRATEGIC MANAGEMENT
In the present scenario, when the environment is changing rapidly, a firm simply cannot make
decisions based on long standing rules, historical policies or simple extrapolations of current
trends. Instead they must look to the future as they plan organizational objectives, initiate
strategy and set policies. The environment is becoming more and more complex and living
with uncertainty is the Management’s biggest challenge.
Strategy
Strategy focuses on how to compete in an industry and how to achieve competitive advantage
by formulating plans and initiating decisions. The more accurate the firm can scan the
environment and predict the future for opportunities and threats, the better it can formulate its
strategies to fulfil their mission and derive above average returns.
Strategic competitiveness is achieved when a firm successfully formulates and implements a
value creating strategy. When a firm implements a value creating strategy that current and
potential competitors are not simultaneously implementing and when other companies are
unable to duplicate the benefits of its strategy, this firm has achieved sustained competitive
advantage. A firm is assured of sustained competitive advantage only after others’ efforts to
duplicate its strategy have ceased because they have failed (Fred, 1997, p.47-55).
A strategy is a unified, comprehensive and integrated plan that relates the strategic advantage
of the firm to the challenges of the environment. It is designed to ensure that the basic
objectives of the enterprise are achieved through proper execution by the organization.
A strategy is the means used to achieve the ends (i.e. objective). A strategy is a plan that is
unified, comprehensive and integrated. It ties all major aspects of the enterprise together and
all the parts of the plan are compatible to each other. A strategy begins with a concept of how
to use the resources of the firm most effectively in a changing environment. It is a long term
plan. It addresses fundamental questions such as:
• What is our business?
• What should it be?
• What are our products, functions and markets?
• What can be done to accomplish objectives?
70 | P a g e
Internal Analysis
Strategic planning begins with an appraisal of the firm’s strengths and weaknesses. All areas
of the firm must be assessed, including organization, financial capabilities, technical
competence, location, production skills, physical plant and equipment, management,
workforce, the sales force, image, customers, customer loyalty, cost advantages, advertising
and so on. Typically, competing firms provide a reference point, a basis for comparison, but a
variety of criteria must be used in assessing strengths and weaknesses, including objective
criteria. Strategic planning is motivated by a desire to maximize exposure of the firm’s
strengths, while minimizing the exposure of the weaknesses. But that does not mean that the
weaknesses have to be accepted or that new strengths cannot be acquired. The central
concern of strategic planning is to allocate the firm’s resources as effectively as possible.
Clearly, one purpose of the analysis of strengths and weaknesses is to define areas in which
the firm should commit resources that will improve its capabilities.
Environmental Analysis
If the environment were static there would be no need for the strategy formulation process.
The environment obviously changes continually, however, as do the firm’s capabilities. The
purpose of environmental analysis is to identify and assess threats and opportunities as they
are evolving in the market place. The company itself is a part of the changing environment,
especially since it develops and refines its basic competence in interaction with its customer’s
evolving needs.
Environmental analysis requires a constant flow of information from a potentially limitless
array of sources. Among the most obvious sources of information are sales representatives,
customers, distributors, trade associations, management associations, universities, trade
journals and professional publications. In addition to this general analysis, there is usually a
need for more detailed analysis and measurement, including forecasts. The accuracy of all
forecasts used as the basis for planning should be checked periodically for the obvious
reasons that actual experience may diverge significantly, even if the original forecasts was
reasonable. A variety of sophisticated techniques exists for sales forecasts (Makridakis,
S.,Wheelwright, S.C., Mcgee,V.E., 1983, p.138-149). The marketing strategist need not be an
expert in the use of these techniques, but he should know the basic assumptions, strengths
and weaknesses of each, especially those that are being used by the staff people who provide
the forecasts and the reports.
71 | P a g e
5.2 STRATEGIES OF MAJOR POWER EQUIPMENT
MANUFACTURERS
During the course of the study it has been established that the future is for equipment-based
services. The trend of EPC contracting the total power plant project has already started
wherein the project divisions of BHEL, DOOSAN Heavy Industries, L&T Power, Chinese
companies like Dong Fang, Shanghai Electric Corporation have outsmarted other players.
Thus in order to formulate the strategy for the Equipment manufacturers the following
common characteristics of the Private players and BHEL has been pointed out to give a better
understanding of the sector.
The similarities between these are:
1. All these companies are multi product companies
2. These are rich in technology and have best design capabilities available in India.
3. These are financially sound and can invest in the projects.
4. The customers are very much familiar with their products and have a distinguished
quality and brand image for these.
5. All these organizations are widely distributed and have presence across all regions of
the country.
However the difference between the above mentioned companies are:
1. BHEL being a PSU and a Maharatna gets favour from the government buyers.
2. The procurement policy of the PSU companies is marred by strict rules and
regulations and is governed by the CVC guidelines.
3. BHEL is also required to procure from small-scale industries under direct or indirect
control of the government.
4. The salary and perks provided to the employees of the company are also governed by
the central government rules that may not be matching the current industry standard.
The marketing strategy is identified using the following management tools:
1. SWOT Analysis, TWOS Matrix and Formulation of SO, WO, ST & WT Strategies
2. EFE Matrix and IPE Matrix
3. SPACE Matrix Analysis
72 | P a g e
The following marketing strategy needs to be needs to be adopted following the above
analysis.
• Having a good combination of products, design capabilities and financial strength the
company should try to aggressively increase the presence in the EPC contracting
market of Power Plant set up and gain experience at the earliest.
• In the IPPs the projects are much of smaller financial value so these do not invite
purchase preference for the government organization like BHEL.
• Strong marketing efforts are required to throttle competition from the contractors that
have close proximity to the SEBs.
• Outsourcing of the products needs to be improved with back-to-back arrangement or
long-term tie-ups with small component manufacturers.
• Use of good corporate image to convert into long term relationship to obtain
synergistic advantage.
5.3 TOWS MATRIX
SO (Strengths-Opportunities) - Use internal strengths to capitalize on external opportunities
WO (Weaknesses-Opportunities) - Improve internal weaknesses by using external
opportunities.
ST (Strengths-Threats) - Use internal strengths to avoid external threats.
WT (Weaknesses-Threats) - This is definitely the most defensive position on the matrix..
SWOT/ TOWS Matrix
Strengths Weaknesses
Opportunities S-O Strategies W-O Strategies
Threats S-T Strategies W-T Strategies
TOWS Matrix for L&T MHI Boilers Pvt. Ltd.
STENGTHS
� Good corporate image of
L&T could be marketed
WEAKNESSES
� Customers are not well
aware about the company
73 | P a g e
upon.
� Complete range of
product for power
generation.
� Considered to be having
technology & design
ability.
� Strong & wide networks
of manpower across
India.
� Good financial
condition.
� Access to strong
technical database of
MHI.
� L&T is the only private
player to have complete
knowledge and
knowhow for turnkey
power generation
projects.
� Good working
environment with
dedicated professionals
with an inherited work
culture of L&T.
� Use of less working
capital and optimum
level of inventory.
and its areas of operation.
� Confidence of the
customers is yet to be
won.
� Intra organisation
coordination in L&T
sometimes delays the
contract preparation
process or drag the issue
to the last minute.
� As LMB is a JV
company managements
of L&T and MHI have to
come together before
taking any decision and
interest of both the
companies have to be
taken into account which
makes the process more
difficult.
� LMB has a very narrow
scope of Supercritical
boilers only.
OPPORTUNITIES
� Huge investments leading
to greater demand of
SO STRATEGIES
� Increase market share
aggressively.
WO STRATEGIES
� Improve procurement
cycle and reduce the
74 | P a g e
goods and services.
� Demand leading to
industry operating at full
& over capacity.
� Early birds to learn faster
and thus achieve repeat
orders.
� Level playing field for
private & public sector
companies.
� Healthier working
environment and
increased private sector
participation in power
sector.
� Increased external
commercial borrowings
or ADB/WB funding
leading to better payment
options.
� Present a better way of
performing the jobs in
tune with the established
brand name.
� To address the demand in
all the parts of the nation
to gain wide spread
experience and exploit the
opportunities.
� To offer design solution
to the customer.
� Invest money in the
process to have financial
advantage over small
contractors.
process difficulties.
� Execute pilot projects to
gain experience and
minimize risks.
� To have a dual role or
organization structure to
address the turnkey as
well as loose equipment
market.
THREATS
� Purchase preference may
be extended to generation
sector.
� Increased in no. of
competitors leading to
price war.
� Emergence of new
players in the market like
Doosan etc.
� Increased Turnkey
contracts may effect
ST STRATEGIES
� To increase lobbying
with the government to
prevent extension of
purchase preference and
maintaining level
playing field in the
segment.
� To tie up with small
contractors on business
sharing arrangements to
prevent price fall due to
WT STRATEGIES
� Reduce costs to increase
margins.
� To train manpower to
counter the threats of
enhanced competition
and to execute the jobs
efficiently.
� Increase the acceptability
in small jobs despite the
preference for other
competitors and PSUs.
75 | P a g e
business of loose sales
and also expose
manufacturers to greater
risk as EPC contractors.
� Political pulls & pressures
may jeopardize the whole
process, alarming it to be
privatization and as anti-
people.
� The overall process of
liberalization of power
sector is moving at a
much faster pace than the
other contemporary
countries.
This pace should not lead
to a total breakage of the
system.
intense competition.
� To check the emergence
of new players and be
well prepared to counter
them.
� To be cautious in the
event of change in
government and the
process of reforms
falling off the track.
5.4 EXTERNAL / INTERNAL FACTORS ASSESSMENT AND
STRATEGIC POSITIONING
One way to establish the Strategic Position and actions to be taken is to list the external
factors (EFE matrix) and the internal factors (IFE matrix) and then develop a SPACE Matrix
(Strategic Positioning and Action Evaluation) which was developed by Rowe, Mason and
Dickel (Strategic Management and Business Policy – a methodical approach, Addison
Wesley 1982).
It is a matching tool that indicates the general type of strategy an Organisation should follow
viz Aggressive, Conservative, Defensive or Competitive. The technique involves the
production of a vector on a matrix where the X-axes represents net effect of Competitive
76 | P a g e
Advantage (CA) and Industry Strength (IS) and Y-axes represents net effect of Financial
Strength(FS) and Environment Stability.
The strategic position of L&T MHI Boilers Pvt. Ltd. as EPC contractors and strategies to be
adopted for taking up of Turnkey Projects is depicted below using the EFE, IFE and SPACE
Matrices.
External Factor Evaluation Matrix (EFE Matrix)
Key External factors Weights Ratings Weighted
Score
Opportunities
Huge investments leading to greater demand of
goods and services.
0.1 2 0.2
Demand leading to industry operating at less &
below capacity.
0.075 2 0.15
Better price realizations 0.025 3 0.075
Early birds to learn faster and thus achieve repeat
orders.
0.1 2 0.2
Formation of business groups and tie-ups for joint
bidding.
0.05 1 0.05
Level playing field for private & public sector
companies.
0.075 2 0.15
Healthier working environment and increased
private sector participation
0.075 2 0.15
Increased external commercial borrowings or
Asian Development Bank/World Bank funding
leading to better payment options
0.025 2 0.05
Threats
Purchase preference may be extended to generation
sector.
0.15 4 0.6
Increased in no. of competitors leading to price war. 0.075 3 0.225
Emergence of new players in Indian market like
Doosan Heavy Industries etc.
0.025 3 0.075
77 | P a g e
Key External factors Weights Ratings Weighted
Score
Increased Turnkey contracts may affect business of
loose sales and also expose manufacturers to greater
risk as EPC contractors.
0.025 2 0.05
Political pulls & pressures may jeopardize the
whole process, alarming it to be privatization and as
anti-people.
0.1 2 0.2
The overall process of liberalization of power sector
is moving at a much faster pace than the other
contemporary countries. This pace should not lead
to a total breakage of the system.
0.1 2 0.2
Total 1 2.375
The ratings are as follows
1. The response is superior
2. The response is above average
3. The response is average
4. The response is poor
Comments:
The score of 2.375 indicates that the L&T MHI Boilers Pvt. Ltd. is just above average in its
efforts to pursue strategies that capitalize on external opportunities and avoid threats.
Internal Factor Evaluation Matrix (IFE Matrix)
Key Internal Factors Weights Rating Weighted
Score
Strengths Good Corporate Image 0.05 3 0.15 Complete range of product for generation 0.25 4 1 Established brand name 0.05 4 0.2 Considered to be having the complete technology and design ability
0.2 3 0.6
78 | P a g e
Key Internal Factors Weights Rating Weighted
Score
Strong and wide networks of manpower across India
0.025 4 0.1
Risk of operation is almost equally distributed among L&T and MHI.
0.025 3 0.075
Use of less working capital and optimum level of inventory
0.025 3 0.075
Weakness The procurement process in the company is not updated with new vendors from time to time.
0.05 1 0.05
Low exposure to the needs & dynamics of power generation equipment business.
0.15 1 0.15
Intra organisation coordination in L&T sometimes delays the contract preparation process or drag the issue to the last minute.
0.125 2 0.25
Tedious decision making process 0.05 2 0.1
Total 1 2.75
The ratings are as follows
1. The response is superior
2. The response is above average
3. The response is average
4. The response is poor
Comments:
The score of 2.75 indicates that the L&T MHI Boilers Pvt. Ltd. is just above average in its
overall internal strategic position.
5.5 SPACE MATRIX OF L&T MHI BOILERS PVT. LTD.
Internal Strategic Position Rating External Strategic Position Rating
Financial Strength (FS) Environmental Stability
(ES)
o Operating Margin 3 o Technology changes -2
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o Return on Investment 3 o Rate of inflation -3
o Leverage 2 o Demand variability -4.5
o Liquidity 5 o Price range of
competitive products
-6
o Working Capital 5 o Barrier to entry into
market
-5
o Cash Flow 4 o Competitive pressure -3
o Ease of exit from business 1 o Price elasticity of
28/8demand
-6
o Risk involved in business 5 o Consumption pattern -6
Average 3.5 Average -4.437
Competitive Advantage (CA) Rating Industry Strength (IS) Rating
o New Product Development -3 o Growth Potential 6
o Market Share -6 o Profit Potential 3
o Product Quality -1 o Financial Stability 4
o Product Life Cycle -1 o Technological Know
how
6
o Customer Loyalty -6 o Resource Utilization 4
o Technological Know How -6 o Capital Intensity 4
o Control over Suppliers -3 o Ease of entry into
market
2
o Vertical Integration -2 o Productivity, Capacity
Utilization
3
Average -3.5 Average 4
Directional vector:
X axis: - (-3.5) +4= 0.5 Y axis: - 3.5+ (-4.437) = -0.937
80 | P a g e
Comments:
The L&T MHI Boilers should follow the aggressive strategy. It has strong internal strengths,
which should be used to take advantage of the external opportunities. The boiler
manufacturer should go for
a) Joint ventures for advanced technology on clean power
b) Market Penetration
c) Market Development
d) Concentric diversification
e) Horizontal Integration
f) Price Competitiveness
81 | P a g e
6. CONCLUSION AND
RECOMMENDATIONS
6.1 Actions to be Initiated
6.2 Means Required for Improving Business
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The study and the analysis of the data give an insight of the requisite marketing strategy for
the L&T MHI Boilers Pvt. Ltd. Thus in order to get considerable and profitable share in the
increasingly competitive market, greater emphasis is required to be put on the following
areas:
� Increasing market share – Aim to increase penetration.
� Price Competitiveness – to meet the levels of the competitors
� Brand building exercise –To gain customers confidence in the power sector.
The above can be achieved through
1. Greater participation in the business for execution of turnkey projects.
2. Pre tendering activities to help customers developing specifications calling for
superior quality products.
3. Increased level of public relations with the customer especially for the power
generation business through dedicated Marketing & sales team.
4. Helping the customer by conducting system studies and advocating the right
equipment at the right place.
5. Improving the flow of information and speed of response towards the customer.
6. Competitive prices and delivery schedules, to meet the levels of other EPC
contractors.
7. Cost cutting exercise within the organization to improve realizations.
8. Awareness about the market development and competitor strategies.
9. Innovating ideas like life enhancement of old equipments, retrofitting old
equipments etc. This will help in increasing the customer’s confidence.
6.1 ACTIONS TO BE INITIATED
Customer Awareness
1. Spec-in Activities: This involves the customer education programme on the latest
trends and technologies. The customers need to be apprised of these trends and
advocated on including these in the tender specifications.
2. Prequalification actions: In this process, the customers need to be approached to
include certain pre-qualification parameters on the health of the organizations in
technical & financial terms, experience.
83 | P a g e
3. Exhibitions/Seminars/ Public Relations/ Local Advertisings: The Company needs
to improve the public presence in terms of the exhibitions and seminars and make the
customers aware about their intentions to be major player in the power generation
equipment business.
Opportunities for Business Diversification
1. Retrofit business: The companies need to use the design capabilities in capturing the
retrofit business. This will not only provide benefits to the customer but also prove the
design capabilities of the companies. This will help the companies in future to get
business from the customers with favourable conditions.
2. Providing Testing Facilities to other Manufacturers: This can also be considered
as a healthy option as certain tests are mandatory requirement under CEA and CERC
guidelines and all manufacturers don’t have testing facilities and are more dependent
on BHEL for this. A good amount of revenue can be generated by providing the
facilities to the both subcritical and supercritical boiler manufacturers.
3. Providing Spares and Other Bought out Items for Manufacturing Boilers- The
bought out items of the other boiler manufacturers can be made from in-house facility
or can be fetched from outside through L&T’s excellent Supply Chain which may
cost more for other small suppliers due to lack of economy of scale and can be sold to
them at a reasonable price to keep them dependable on LMB facilities.
4. Providing Consultancy Services- As LMB is having a pool of executives of high
calibre and knowledge it can be utilised through providing consultancy services to the
utilities and other potential customers. It will not only help to build the brand but also
to enhance the experience and knowledge of the employees.
5. Leasing of Equipments- As all the machineries are not always used at the project
site, they can be leased to other contractors who are working nearby the site so that
maximum benefit of the equipments can be extracted by reducing the idle time and
vice versa.
Others
1. Expenditure towards R&D- A certain part of the total revenue is to be dedicated
towards the development of technology acquired from MHI.
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2. Yearly Customer Feedback- A customer satisfaction survey is to be done on yearly
basis to get the knowledge of the problems faced by the consumer so that
improvements can be done to mitigate the deficiencies and same is to be conveyed to
the customers.
3. Identifying potential projects: The Company needs to identify potential projects on
the basis of revenue generation and ease of execution of the contracts.
4. Purchasing or Manufacturing Decisions- The materials used in the process of
manufacturing are to be grouped as per their availability and cost of purchasing. Then
the group of materials which costs the most are considered for buying or making
decisions and this process has to be repeated at least once in a year. Simultaneously
new markets are to be searched for purchasing of the costly materials. It is always
advisable to get materials manufactured from in-house facilities but it is only feasible
if the technology involved is not changing frequently otherwise purchasing is
preferred.
6.2 MEANS REQUIRED FOR IMPROVING BUSINESS
1. Training plan for the executives to deal with high volume jobs. As per the current
business models the companies are executing low volume high margins jobs, which
require dealing with less no. of customers and limited sites. Thus to improve the
efficiency of the executives, the executives need to be trained to handle such jobs.
2. Site management: The people need to be trained to handle site conditions, as with the
increase in volume of business and large number of sites, more people will be
required to manage the sites.
3. Develop manpower in multi-product applications/ application engineering through
factory and product training.
4. Strengthening network: Though the company is having a well-established marketing
network but there are certain lapses, which increase the response time to the customer.
Thus these factors need to be improved to offer the best possible services to the
customers.
5. Dedicated Team for Business Development, Strategy Preparation and
Performance Appraisal- A group of dedicated manpower is required to be
developed who will specifically be responsible for Business Development, Strategy
85 | P a g e
Preparation and Performance Appraisal. People of high calibre can also be hired
specially from BHEL which is a leader of the sector and have good network in the
industry.
6. Quantification of Strategic Plan for next 5 Years- A strategic plan is to be made
and communicated to the employees for the next 5 years with a periodical review of
their achievements so that the employees will always be able to focus on their
individual goals to be achieved.
Infrastructure / Tools
1. Better communication facilities among the executives.
2. Data management tools and software packages to keep track of the changes in the
prices of the raw material.
Procurement & Business Tie-Ups
1. In order to address the business effectively the organizations need to have long terms
tie-ups with small vendors.
2. The vendors list needs to be updated on the performance and price parameters and
also on the requirement and perception of the final customer.
3. The companies need to formulate business-sharing arrangements to minimize the
competition and improve realizations.
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7. REFERENCE
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1. Bolt Gordion, Market and sales Forecasting – A total approach, Kogan
Page, London, 1994, p.65-72.
2. Berry, L.L, Shostack, G.L, & Upah, G.D., Emerging perspectives on
service marketing, American Marketing Association, Chicago, 1994,
p.25-38.
3. Brennan, T J, Palmer, K L, & Martinez, S A.; Alternating Currents :
Electricity markets and public policy, Washington, DC: Resources for
the Future, 2002,p.185-188.
4. Buzell, R.D., Gale, B.T, & Sultam, G.M., (1975). “Market Share – a key
to Profitability”. Harvard Business Review 53, 1, p.97-106.
5. Byrne, J & Rich, D (eds.); Energy and environment: The policy
challenge. New Brunswick, NJ : Transaction, 1992, p.271
6. Government of India, Report of the Expert Group on Restructuring of SEBs,
July 2002.
7. Indian Electrical & Electronics Manufacturers Association (IEEMA)
8. IEEMA Journal, June 2011.
9. IEEMA Journal, February 2012.
10. IEEMA Journal, September 2011.
11. IEEMA Journal, April 2012.
12. Ministry of Power, Government of India, Major Initiatives for Power Sector
Development, May 2011.
13. Planning Commission (Power and Energy Division), Government of India,
Annual Report on the Working of State Electricity Boards and Electricity
Departments
14. Web site of Ministry of Power: URL:http://www.powermin.nic.in,
15. Web site of Central Electricity Regulatory Commission: www.cercind.gov.in
16. Web site of Central Electricity Authority: www.cea.nic.in
17. Web site of Bharat Heavy Electricals Limited: www.bhel.com
18. Web site of Doosan Heavy Industries & Construction: www.doosan.com
19. Web site of L&T MHI Boilers Pvt. Ltd.: www.larsentoubro.com
