The earlier concern of Chinese competition in power generation equipment seems fast receding as many customers were cancelling the orders placed with Chinese firms and were coming back to Bharat Heavy Electricals Limited (Bhel), said RK Wanchoo, executive director of the RC Puram unit of the state-owned heavy power equipment manufacturer.
“This is happening due to both quality and service issues,” Wanchoo told reporters at the annual press briefing here on Thursday.
In addition to the pricing advantage that encouraged Indian power developers to look for power plant equipment from China, the capacity constraints of Bhel in coping with the huge spurt in demand from new projects also drove them towards overseas alternatives, he said.
Without specifying the number or names of the power developers, Wanchoo said a large number of customers had redirected their orders to Bhel after cancelling the earlier orders placed with Chinese firms.
Stating that operation and maintenance (O&M) was the crucial input power plants required for at least the next 25 years of the plant life, he said project developers were choosing Bhel not only for its equipment quality but also the reliable and extensive network of its aftersale services.
Above all, the company produces custom-made power plant equipment, he said.
The allround slowdown in execution of power projects across the country due to coal linkage and environmental clearance issues had in a way also worked in its favour as the rush for early delivery of equipment subsided. There was no instance of delay in delivery schedules reported during the year, according to him.
Voluntary requests for postponement of some delivery schedules saw the RC Puram unit clock moderate sales revenues of Rs 7,072 crore in 2011-12. Yet, the factory fully utilised the manufacturing capacity during the year, according to him. The unit has an order book worth Rs 15,000 crore to be delivered in the next 24 months.
Besides, foreign orders have almost dried up for the unit with exports accounting for only about Rs 200 crore during the last financial year.
“Exports used to have 20 per cent share in out annual revenues. This has drastically come down because there is no significant capacity expansion happening outside India and China,” Wanchoo said.
Despite the moderate growth in total revenues, the company was able to increase the gross profit by 38 per cent, mainly by bringing down the material costs by 2 percentage points to 60 per cent among other cost-saving measures, according to him.
