The Hindu Business Line : Shortage in steel supply may pose problems for BHEL

WHEN Tata Power's 120 MW Jojobera Unit IV goes on stream in October, power equipment supplier BHEL will rejoice for having done the project in a record time of 24 months. But the problem with records is that they set a new benchmark even for the record-holder and raise the expectations further.

Will BHEL be a victim of its own efficiency? Customers would demand tighter delivery schedules, agreeing to which could be difficult at certain times. Such as now.

In the last one year, steel supplies have become hard to get. This has happened precisely at a time when BHEL's order book is overflowing. As at the end of last year, BHEL's Tiruchi unit, which produces boilers, had an outstanding order book of a record Rs 7,078-crore, compared with Rs 5,220 crore a year ago.

Thanks to the burgeoning orders, steel consumption for BHEL, Tiruchi, would increase to 300,000 tonnes a year, from 200,000 a year ago, says Dr V. Gopalakrishnan, Executive Director, In-charge of the Tiruchi unit.

BHEL's site officials at Jojobera (near Jamshedpur) told a team of visiting journalists last week of the problems they faced with procuring steel. SAIL has been the major supplier.

However, senior officials of BHEL say that efforts to broadbase procurement of steel have begun to show positive results.

To diversify steel supply sources, BHEL has been scouting both domestic and international markets. "Earlier, we were looking at only the Western markets (for buying steel). Now we have started importing from countries such as Ukraine and Romania," says Mr A.K. Mathur, Director, BHEL, who was the Executive Director in-charge of the Tiruchi unit until May.

In the domestic market, besides an agreement with the Jindals, BHEL is looking at some steel re-rollers for supplies, Mr Mathur told Business Line today.

Still some customers, whose projects are too small to play around with construction schedules, will suffer delays in getting their supplies from BHEL — an impact of the tight steel situation last year.

But now that the supply situation is easing, "we will be current with our customers from the third quarter of the year," says Dr Gopalakrishnan.

To do this, BHEL, Tiruchi, is working at breakneck speed. Dr Gopalakrishnan aims at the unit completing 45 per cent of the year's job in the first half. Traditionally, it has been 30 per cent in the first six months.

"That we will recover is certain, but `how quickly' is the question," Dr Gopalakrishnan says.

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