ECOMOMICS

project
Topic- The relevance of BHEL in
the Indian Economy, its trend of
growth and future prospects.

Submitted by- Niranjana Nair

XIIth Teak
 ACKNOWLEDGEMENT

At the successful completion of this project, I would

like to thank God for showing me guidance at
moments of despair. Secondly, I’d like to thank my
parents for their constant support and words of
wisdom. Also, I would like to sincerely thank our
Economics lecturer, Mrs. Girija Nair for her valued
insights on the subject.
 Index
Serial no. Subtopic Page no.
1 Introduction to 01-03
PSE
2 BHEL 04-06
3 Growth and 07-12
Future
Prospects
4 Conclusion 13
5 References 14
 INTRODUCTION
Before we get into the topic, here is a brief on Public
Sector Enterprises-

Public Sector Enterprises (PSU) are individual and

commercial enterprises that are owned, managed and
operated by the government- central, state or local
bodies (the company stock needs to be majority-owned
by the government to be a PSU). PSUs strictly may be
classified as central public sector enterprises (CPSEs)
or state level public enterprises (SLPEs). In CPSEs, the
direct holding of the Central Government or other
CPSEs is 51% or more. They are administered by the
Ministry of Heavy Industries and Public Enterprises.

History of PSUs-When India achieved independence

from the British in 1947, its economy was in shatters.
It was primarily an agricultural country with a weak
industrial base. In this situation, the national
consensus was in favor of rapid industrialization of
the economy, for industrialization was believed to be
the key to economic development, improving the
living standards and providing the status of economic
sovereignty.
The Bombay Plan noted the requirement of
government intervention and regulation, on the basis
of which the first Industrial Policy Resolution was
announced in 1948. Subsequently, the Planning
Commission was constituted in March 1950 and the
Industrial Act was enacted in 1951 with the objective
of empowering the government to take necessary steps
to regulate industrial development.
Prime Minister Jawaharlal Nehru believed that the
establishment of basic and heavy industry was
fundamental to the development and modernization
of the Indian economy. India's second five year plan
(1956–60) and the Industrial Policy Resolution of 1956
emphasized the development of public sector
enterprises to meet Nehru's national industrialization
policy. His vision was carried forward by Dr. V.
Krishnamurthy known as the "Father of Public sector
undertakings in India".
In 1951 there were just five enterprises in the public
sector in India, but in March 1991 this had increased
to 246 and to 320 in March 2016, out of which 244 are
operational
The major objective behind the setting up of PSUs was
to accelerate the growth of core sectors of the
economy; to serve the equipment needs of strategically
important sectors, and to generate employment and
income. A large number of sick units (i.e., a company
which is found at the end of any financial year to
have incurred accumulated losses equal to or
exceeding its entire net worth) were taken over from
the private sector. Additionally, Indira Gandhi's
government nationalized fourteen of India's largest
private banks in 1969, and an additional six in 1980.
This government-led industrial policy, with
corresponding restrictions on private enterprise, was
the dominant pattern of Indian economic development
until the 1991 Indian economic crisis.
 BHARAT HEAVY ELECRICALS
LIMITED (BHEL)

 WHAT IS BHEL?
BHEL is an Indian state-owned integrated power
plant equipment manufacturer. It is one of the largest
engineering and manufacturing company of its kind
in India. Being a heavy sector industry, its
performance is closely linked to the country’s
development. It is engaged in the design, engineering,
manufacturing, construction, testing, commissioning
and servicing of a wide range of products, systems and
services for the core sectors of the economy, i.e., power,
transmission, industry, transportation, renewable
energy, oil & gas and defence, electricals, etc.
  HISTORY OF BHEL?
BHEL was established in 1964, ushering in the
indigenous Heavy Electrical Equipment industry in
India. Heavy Electricals (India) Limited was merged
with BHEL in 1974. In 1991, BHEL was converted into
a public limited company. Over time, it developed the
capability to produce a variety of electrical, electronic
and mechanical equipment for all sectors, including
transmission, transportation, oil and gas and other
allied industries. However, the bulk of the revenue of
the company is derived from sale of equipment for
power generation such as turbines, boilers, etc. As of
2017, BHEL supplied equipment contributed to about
55% of the total installed power generation capacity of
India. The company has also supplied thousands of
Electric Locomotives to Indian Railway, as well as
defence equipment such as the Super Rapid Gun
Mount (SRGM) naval guns and Defence Simulators to
the Indian Armed Forces.

BHEL has a wide network of 17 manufacturing plants,

8 service centres, project divisions and 15 regional
marking centres spread throughout India with a
highly skilled and dedicated workforce of about 40,000
regular employees. It is well-known for its excellency
in manufacturing suitable products and providing
services efficiently at competitive prices.
BHEL has retained its market leadership position
during 2015-16 with 74% market share in the Power
Sector. It is one of the CPEs having the status of
Maharatna (this status raises a company’s investment
ceiling from Rs. 1,000 crore to Rs. 5,000 crores, also
providing it permission to invest 15% of their net
worth in a project.), with 67.7% shareholding by the
Government of India.
 Trivial Details about BHEL-
1. Type- State-owned enterprise
2. Traded as-BSE: 500103, NSE: BHEL
3. Industry- Electrical equipment
4. Founded- 1964
5. Founder- Government of India
6. Headquarters- New Delhi, India
7. Key people-Atul Sobti (Chairman & MD)
8. Revenue- Increase₹29,474.99 crore (US$4.3 billion)
(2017)
9. Number of employees- 39,821(2017)
 Trend of growth
 As stated in the introduction, BHEL has an
excellent track record. Despite of the same, there
has been a decline in company’s turnover between
2013-14 and 2015-16 due to global conditions and
low rate of domestic investment. “In spite of fiscal
2016-17 being an extremely challenging year,
Bharat Heavy Electricals Limited (BHEL) had
achieved double digit growth in its topline and
bounced back into profit in fiscal 2016-17,
reversing the declining trend of the last three
years and ending the year with significant
traction in growth drivers.” This was stated by
Atul Sobti, chairman and managing director,
BHEL at the 53rd Annual General Meeting of the
company. Addressing shareholders, Sobti said that
during the year, BHEL recorded a turnover of Rs
28,840 crore, up 11 per cent over the previous year
and a Profit Before Tax (PBT) of Rs 628 crore,
compared to a loss of Rs 1,164 crore (IND-AS
restated) in the previous fiscal. Net Profit (PAT)
 stood at Rs 496 crore, against a net loss of Rs 710
crore (IND-AS restated) in the previous year.
YEAR TURNOVER
2006-07 Rs. 18, 839 Cr.
2007-08 Rs. 21, 498 Cr.
2008-09 Rs. 28,090 Cr.
2009-10 Rs. 34, 198 Cr.
2010-11 Rs. 43,337 Cr.
2011-12 Rs. 49, 510 C.
2012-13 Rs. 50, 156 Cr.
2013-14 Rs. 40, 338 Cr.
2014-15 Rs. 30, 947 Cr.

 BHEL has well acclaimed track record of profits

and dividends. The company has been earning
profits since 1971-72 and paying dividend since
1976-77. An interim equity dividend of 40 per cent
has been paid for 2016-17, maintaining the track
record of paying dividends uninterruptedly since
1976-77. In addition, the company has
recommended a final dividend of 39 per cent,
subject to the approval of shareholders. With this,
the total dividend for the year 2016-17 stands at 79
per cent.

 BHEL has been giving a lot of emphasis on R&D

and technological upgradation through
acquisition of advanced foreign technology, so as
to develop a modern engineering enterprise.
 During the year 2012-13, the company invested
about Rs. 1,252 Crore on R&D efforts, which
corresponds to nearly 2.50% of the turnover of the
company, focusing on new product and system
developments and improvements in existing
products. The IPR (Intellectual Property Rights)
capital of BHEL grew by 21.5% in the year, taking
the total to 2170. Also an Significantly, BHEL is
one of the only four Indian companies and the
only Indian Public Sector Enterprise figuring in
'The Global Innovation 1000' of Booz & Co., a list of
1,000 publicly traded companies which are the
biggest spenders on R&D in the world.

 55% of India’s nuclear power generating capacity

has been installed by BHEL. 50% of Indian
Railways rolling stock is equipped with BHEL’s
traction equipments.

 BHEL's global references are spread across over 82

countries across all the six continents of the world.
The cumulative overseas installed capacity of
BHEL manufactured power plants exceeds 9,000
MW across 21 countries including Malaysia,
Oman, Iraq, UAE, Bhutan, Egypt and New
 Zealand. Their physical exports range from
turnkey projects to after sales services. It has
offices in 6 countries.

 BHEL has increased the power manufacturing

capacity to meet India’s growing demand for
power. It achieved a significant milestone of over
2,25,ooo MW per annum installed thermal power
plant capacity for power plant manufacturing
upto 40 KV in the country.

 BHEL is the 7th largest manufacturer of power-

generating equipment in the world. It is the
largest state-owned engineering and
manufacturing enterprise in India.

 Installed equipment for over 90,000 MW of power

generation –– for Utilities, Captive and Industrial
users.

 Initiatives, such as Make in India, has resulted in

an overall improvement in BHEL’s business, after
the tough 3 years of losses incurred.
 Future prospects
 BHEL has been trying to diversify for a long time;
even so over 75 per cent of its revenue still comes
from thermal power equipment. Its second biggest
manufacturing segment is railway equipment. "The
modernization of the railways alone could keep
BHEL thriving for the next 10 years”, said Sobti.

 The company has a vision of becoming a global

engineering enterprise, providing solutions for a
better tomorrow. It has the vision of providing
sustainable business solutions in the fields of energy
industry and infrastructure. A speculation has been
made that from now, it will be looking for overseas
opportunities much more aggressively, especially in
the neighborhood and in South-east Asia, for which
it is apparently ready to go through a cultural
change. “It will create a diversified portfolio for its
next wave of growth that will include areas such as
solar energy, transportation and water business.
 Customer-focused business groups have been created
for nuclear, hydro, defence & aerospace, and
transportation for strengthening diversification
efforts, “said Sobti.

 BHEL, being a global engineering enterprise

providing solutions for a better tomorrow, is
committed towards holistic welfare of the society by
undertaking CSR activities within the ambit of
Schedule-VII of the Companies Act, 2013, as amended
from time to time. The thrust areas for CSR
activities will be: Inclusive India, Healthy India,
Clean, Educated India, Responsible India Green
India and Heritage India. In the above thrust areas
priority will be given to under privileged, neglected
and weaker sections of the society. The company
shall give preference to the local areas for spending
at least 75 % of the amount earmarked for CSR
activities. Periodic review of this policy shall be
done to ensure its continued suitability, adequacy
and efficacy.

 A dedicated ‘Project Closure Synergy Group’ has

been created to ensure “early closure of project sites,
optimisation of manpower utilisation, resolving
outstanding issues with various stakeholders, and
realising cash.
 Conclusion
From this report on BHEL, we can notice that BHEL
is an acclaimed PSE. With great achievements,
national, as well as global, it has established its name
an electric equipment industry in the market. Despite
of major setbacks and losses, it stands unwithered. It
has a well- laid strategy for the future, thus making it
a promising PSE.
 REFERENCES
1. https://www.thehindubusinessline.com/companies
/bhel-to-diversify-into-new-areas-for-next-wave-of-
growth/article9868595.ece
2. https://economictimes.indiatimes.com
3. www.wikipedia.org
4. http://www.bhel.com
5. Annual Report PDF (2016-17) OF BHEL
6. Frank ISC Class 12th Economics Textbook