BHEL FY08 profit jumps 17%

Power equipment supplier Bharat Heavy Electricals (BHEL) has recorded a 17 per cent rise in net profit to Rs 2,815 crore in FY08 on the back of a 15 per cent jump in turnover at Rs 21,608 crore.

Its annual turnover has jumped two-and-a-half times from Rs 8,662 crore in FY04. "We aim to be a Rs 50,000 crore company by 2012," said Chairman and Managing Director K Ravi Kumar.

During FY08, the company got orders worth Rs 50,265 crore, taking its order book to Rs 85,000 crore.

"There was a surge in orders after the Prime Minister's directive about placing all orders for projects to be completed in the current Five Year Plan be placed by 2007-08," Kumar said.

The company invested Rs 726 crore in FY08 and plans to spend around Rs 1,200 crore in FY09 and Rs 1,400 crore in FY10. These investments are aimed at raising the company's capacity from 10,000 mw to 50,000 mw by FY12. Capital expenditure of Rs 4,200 crore has been approved by the government for the 11th Five Year Plan. 
 

ELECTRIC PERFORMANCE
Rs crore	2006-07	2007-08	% chg
Turnover	18,739	21,608	15
PBT	3,736	4,395	18
Net profit	2,415	2,815	17
Net worth	8,788	10,573	20
Orders inflow	35,643	50,265	41
EPS (Rs)	49.3	57.5	17

The power equipment major is also planning to set up joint ventures with state electricity boards of Gujarat, Karnataka, Andhra Pradesh, Orissa and Uttar Pradesh. These joint ventures will be for supplying super critical boilers for power generation.

"BHEL's stake in these joint ventures will be restricted to 26 per cent," Kumar said, adding that funding of the joint ventures would not be a problem as the company has surplus funds.

It has also formed an equal joint venture with power producer NTPC for setting up power plants and taking up engineering works. BHEL will also enter with an agreement with Nuclear Power Corporation of India (NPCIL) on Friday to set up nuclear power plants in India and overseas.

In the fourth quarter ended March 2008, the company has also set aside 40 per cent of its turnover for payment of wages. This is up from the earlier budgeted 25 per cent hike in salaries. The company hired 4,000 employees in FY08. It plans to hire an additional 14,000-16,000 employees by FY12.

"There has also been a 1 per cent increase in cost of raw materials such as steel during the fourth quarter," Kumar said.

According to analysts, higher wages and raw material prices were likely to result in lower profits in the fourth quarter of FY08 compared with the comparative previous quarter.

BHEL would declare its fourth quarter audited results later this month, a company spokesperson said. Meanwhile, the company announced it will sign an agreement with Nuclear Power Corporation of India for a joint venture to manufacture equipment for nuclear power plants.

The joint venture would also take up engineering, procurement and construction activities for nuclear power projects in India and abroad, BHEL Chairman and Managing Director K Ravi Kumar told journalists.

The power equipment manufacturer expects to spend over Rs 4,000 crore in the proposed joint venture, which will be funded through internal accruals.