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Public sector undertakings are seldom known to script a corporate turnaround.
BHEL and NTPC Ltd, though, are exceptions. Both have managed to turn around two perpetually bleeding state-owned undertakings that were taken out of the Board for Industrial and Financial Reconstruction (BIFR) and placed under their respective charge.
BHEL, which took over the ailing Bharat Heavy Plate and Vessels (BHPV) in 2008, has changed the fortunes of the Visakhapatnam-based firm that supplies pressure vessels, oxygen cylinders and boilers to heavy industries.
In 2010-11, BHPV reported a net profit of Rs 8.78 crore on a turnover of Rs 137 crore.
NTPC too has managed to turn around Transformers and Electrical Kerala (TELK), a bleeding Kerala Government-owned enterprise in which NTPC picked up a 44.6 per cent stake around four years back.
The company has come out of the red and paid a dividend of Rs 1.53 crore to NTPC for 2010-11.
The Kochi-based firm was referred to the BIFR in 1995 on account of mounting losses and it had not paid dividends for nearly 30 years. TELK, which designs and manufactures extra high voltage electrical equipment, is now a zero-debt company with a net worth of Rs 107 crore.
Simple formula
The formula, say BHEL officials, is simple. Improve production efficiencies, cut down on non-core activities, redeploy excess staff and divert orders from the parent company.
“BHEL is providing all resources to BHPV in terms of technology support, capacity enhancement, human resource augmentation and development, working capital, order booking, and policy and procedure alignment,” a senior BHEL official involved in the exercise said.
BHPV, with accumulated losses of Rs 868 crore, was referred to the BIFR in 2004 and the Cabinet gave its nod for the revival plan in November 2007, setting the stage for BHEL to take over the company.
Apart from TELK, NTPC, in partnership with GAIL, had earlier reported the revival of the erstwhile Dabhol power project, after years of shutdown and operational losses.
Ratnagiri Gas and Power Pvt Ltd, the company led by NTPC and GAIL that now owns the project, made all six gas turbines operational earlier last year, achieving full capacity of 1,940 MW on March 31, 2011.
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