BHEL order-book overflowing,but so are the constraints

With orders on hand at a record Rs 1,54,000 crore, India's largest power equipment manufacturer, BHEL, sees its turnover exceeding the target of Rs 45,000 crore for 2011-12, but the company's Chairman and Managing Director, Mr B.P.Rao, also sees several constraints in this journey.

The first is that of manpower. Mr Rao says BHEL has been taking in over 4,000 people each year in the last three years ? and would continue to do so in the next two years ? but the problem is a bit external. ?The ability of our contractors to mobilise manpower continues to be an issue,? Mr Rao said at a press conference on Tuesday at the company's Boiler Auxiliary Plant at Ranipet.

Problems

Shortage of welders is the biggest headache, but finding electricians, fitters and masons, too, is a worry. BHEL itself has been taking initiatives in training welders but ?it is a drop in the ocean.?

However, the situation is a lot better than what it was three years ago, as the slowdown in other sectors (real estate) and geographies (Gulf) has made skilled workers return to ?power'.

The other constraint is raw material availability, mainly steel. Boiler grade steel, especially for supercritical and nuclear boilers, is in shortage. So is the ?cold rolled grain-oriented' (CRGO) steel, used in transformers. BHEL needs about 40,000 tonnes of this commodity (the country needs 200,000 tonnes, according to Mr Rao).

The third constraint is that of ?balance of plant' equipment ? coal handling and ash handling plants, cooling towers and a range of other equipment needed for a power project. ?BOP constraints are definitely there,? Mr Rao said, adding that the suppliers of these equipments are fully booked.

There are no quick-fix solutions, but the problems should ease in the near term, Mr Rao said. The Government's initiatives in making companies adopt 2,000-odd Industrial Training Institutes in the country should result in a supply of skilled labour in a few years.

Steel availability should improve with companies such as Essar and Jindals coming forward to make boiler-grade steels.

As for CRGO, a consortium of SAIL and RINL intends to put up a plant, and BHEL itself is interested in taking a 26 per cent stake in the joint venture, Mr Rao said.

Similarly, a joint venture of BHEL and NTPC is set to produce coal and ash handling plants from 2013.

Protection from China imports

Answering a question, Mr Rao said BHEL advocates the imposition of Customs duty on imported power equipment. Boilers and turbines of an estimated value of Rs 40,000 crore are likely to come from China.

BHEL, Mr Rao said, is not worried about competition, but believes that the Chinese suppliers have an unfair advantage in terms of subsidised inputs. He said that a Committee of Secretaries had recommended the imposition of customs duty on imported power equipment and the forthcoming Budget might have something to say on this.

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