STRATEGIC MANAGEMENT PROJECT
BHARAT HEAVY ELECTRICALS LIMITED
Submitted by: GROUP 1 Santiago Appaiah Desmond Manasi Supreet Vignesh
ABOUT BHEL
icals Limited is t he largest engineer in ing and manuf actur in ing enterpr ise ise in India Bharat Heavy Electr ic in the energy-r el elated/inf ra uctur e sector today. BHEL was est a blished mor e than 40 year s ago, rastr uctu usher in ing in the indigenous Heavy Electr ic ical Equi p pment industr y in India - a dr eam that has been mor e than r ealized with a well-r eco ecognized track r eco ecor d of p for mance. BHEL manuf actur es es per fo over 180 pr oducts oducts under 30 major pr oduct gr ou ou ps and cater s to cor e sector s of the Indian pr oduct Economy viz., Power Generation & Transmission, nsmission, Industr y, y, Trans por tation, Renewa ble Energy, etc. BHEL has acquir ed ed cer tific tifications to Quality Management Systems (ISO 9001), Envir onment onmental Management Systems (ISO 14001) and Occu pational Health & Safety Management Systems (OHSAS 18001) and is also well on its jour ney ney towar ds ds Total Quality Management. BHEL r e pr esents esents the capital goods industr y in India.
CORPORATE VISION, MISSION AND VALUES VISION
A wor ld ld class engineer in ing enterpr ise ise committed to enhancing stakeholder va r value.
MISSION
To be an Indian Multinational Engineer in ing Enterpr ise ise pr oviding tot al business solutions t hr ou ough quality pr oducts, oducts, systems and services in the fields of energy, industr y, y, trans por tation, inf ra uctur e and other p rastr uctu potential ar eas. Mission statement evaluation matrix
Firm
Customer Products Markets Profit Technology Self Public Employees &Services & concept Image Growth No Yes No No No Yes No No No
BHEL
VALUES Zeal
to excel and zest for change
Integr ity ity and Fair ness ness in all matte r s Res pect for dignity and potential of individuals
ABOUT BHEL
icals Limited is t he largest engineer in ing and manuf actur in ing enterpr ise ise in India Bharat Heavy Electr ic in the energy-r el elated/inf ra uctur e sector today. BHEL was est a blished mor e than 40 year s ago, rastr uctu usher in ing in the indigenous Heavy Electr ic ical Equi p pment industr y in India - a dr eam that has been mor e than r ealized with a well-r eco ecognized track r eco ecor d of p for mance. BHEL manuf actur es es per fo over 180 pr oducts oducts under 30 major pr oduct gr ou ou ps and cater s to cor e sector s of the Indian pr oduct Economy viz., Power Generation & Transmission, nsmission, Industr y, y, Trans por tation, Renewa ble Energy, etc. BHEL has acquir ed ed cer tific tifications to Quality Management Systems (ISO 9001), Envir onment onmental Management Systems (ISO 14001) and Occu pational Health & Safety Management Systems (OHSAS 18001) and is also well on its jour ney ney towar ds ds Total Quality Management. BHEL r e pr esents esents the capital goods industr y in India.
CORPORATE VISION, MISSION AND VALUES VISION
A wor ld ld class engineer in ing enterpr ise ise committed to enhancing stakeholder va r value.
MISSION
To be an Indian Multinational Engineer in ing Enterpr ise ise pr oviding tot al business solutions t hr ou ough quality pr oducts, oducts, systems and services in the fields of energy, industr y, y, trans por tation, inf ra uctur e and other p rastr uctu potential ar eas. Mission statement evaluation matrix
Firm
Customer Products Markets Profit Technology Self Public Employees &Services & concept Image Growth No Yes No No No Yes No No No
BHEL
VALUES Zeal
to excel and zest for change
Integr ity ity and Fair ness ness in all matte r s Res pect for dignity and potential of individuals
Str ict ict adher ence ence to commitments
Ensur e s peed of r es es ponse
Foster lear nin ning and teamwor k k
Loyalty and pr ide ide in the com pany.
Industry Overview
The engineer in ing sector is the largest segment of the overall Indian industr ial sector . India has a str on ong indust r ial and capital goods base. The sector can be categor ized ized into heavy engineering ing segment for ms ms the major ity ity of t he and light light engineering engineering segments. Heavy engineer in engineer in ing sector in India. India has a well-develo ped and diver sified sified industr ial machiner y/c y/capital base capa ble of manuf actur in ing the entir e range of industr ial machiner y. y. The indust r y has also managed to successf successfully ully develo p advanced manuf actur in ing technology over the year s. s. Among the develo ping countr ies, ies, India is a major ex por te ter of heavy and light engineer in ing oducing a wide range. The engineer in ing industr y has shown capacity to manuf actur e goods, pr oducin large-size plants and equi p ious sector s like power , fer tilize tilizer pment for r var var ious r aand cement. Lately, air ol equi p y. The heavy electr ic ical industr y in pollution contr ol pment is also being made in the countr y. India meets the entir e domestic demand. Player s in the engineer in ing sector in India can be categor ized ized as follows: y
y
y
Equi p pment manuf actur er s such as Bharat E ar th Mover s Limited (BEML), Siemens, Cummins India, ABB, etc Execution s pecialists suc h as Bharat Heavy Electr ic icals Ltd.(BHEL), Lar sen sen &Toubr o (L&T), Engineer s India Nic he player s such as Ther max in envir onment onmental solutions, Voltas in electr o-mec o-mechanical pr o jects, ABB for r aautomation technologies and so on.
Power sector : - India will continue to be a power deficient countr y for the next few year s. s. Thus it makes it im perative for the countr y to add mor e capacity to suffice its ever gr owing demand. In r gr owin or de der to meet the mission of ³Power for a r all by 2012´ the countr y plans to add ~160GW over the FY08-17. This translates into ~US$150bn o ppor tunity tunity for the power equi p s. BHEL pment player s. being the largest player contr ollin olling 65% of the domestic mar ket ket is a dir ect ect beneficiar y of this o ppor tunity. tunity. BHEL¶s equi p y¶s generating assets. BHEL will also pments for m 64% of the countr y¶s benefit f r om R&M or de der s of ageing plants acr oss oss the countr y. y. In addition, BHEL will also r om benefit as com petition f r om Chinese and Kor ean player s r em emains low. It r ecently ecently outbid its r om inter national counterpar ts ts under the inter national com petitive bidding to win an or de der for 2 sets of 600MW in Madhya Pradesh. This should ena ble BHEL to gr ow ow its o r de der book going for war d
and r eap benefits of higher investment in the sector . We ex pect BHEL to continue to maintain its 64% mar ket shar e going for war d.
COMPETITIVE ISSUES IN THE INDUSTRY
PERTAINING TO GOVERNMENT: y y
y
y
High incidence of indir ect taxation. Pur chase pr efer ence in f avor of public sector enterpr ises which r esults in distor tion of mar ket mechanism. This pr events pr ivate sector enterpr ises f r om having a level playing field. Ex por t transaction costs fo r the Indian Capital Goods industr y ar e the highest in the wor ld. Indian Capital Goods industr y also lags in st r ong institutional mechanisms fo r ex por t cr edit and pr omotion.
PERTAINING TO BUSINESS ENVIRONMENT: y y y
y y
y y
Low la bor f acto r pr o por tion is low when com par ed to other countr ies R aw mater ials ar e mostly domestic in o r igin. Indian capital goods manuf actur er s have wor king capital r equir ements of 45% as against global benchmar k of 15% Technological com petitiveness of Indian Capital goods sector ar e low. Negative per ce ptions a bout ³Made in India´ have damaged the a bility of Indian Capital Goods manuf actur er s to com pete at o ptimal capacity in wor ld mar kets. Quality of inf rastr uctur e is poor when com par ed to industr ialized nations. Low degr ee of buyer so phistication.
PERTAINING TO FIRM LEVEL: y
y y y y y
Owner shi p patte r n in the Indian Capital Goods sector is mar ked by the dominance of public sector enterpr ises Sub o ptimal mar ket functioning Im por t weights and ex por t weights ar e low which leads to low com petitiveness Indian fir ms invest less in mar keting activities and have low customer or ientation Resear ch s pending is low as a per centage of sales O perational efficiencies ar e low.
Porter¶s five forces Model - BHEL: I.
Bargaining power of suppliers:
Her e the bargaining power of su pplier s is not ver y high, since gover nment contr ols the t ar iff str uctur e; however this might change in futur e. Su pplier s ar e well diver sified in t he globe and BHEL ensur es pr om pt deliver y by the su pplier s.
II.
Bargaining power of Buyers:
Bargaining power of the r etail customer s is low, as power is in shor t su pply. However gover nment is a big buyer and payment by gover nment is mor e erratic. Wide customer base in India and in all the par ts of t he wor ld
III.
Barriers to entry:
Barr ier s to ent r y ar e high, as enter ing this business r equir es heavy investment initially. The other barr ier s ar e fuel link ages, payment guarantees f r om state gover nments, r etail distr ibution licensed etc. Com petitive pr ice and or der s ar e captur ed by most of the dominant player s, like ABB, L&T, GE etc.
IV.
Rivalry among existing players:
Alstom, Mitsubishi, general electr ic. The intensity of com petition is basically high, since each one is str iving to gain their own com petitive advantage to gain bigger mar ket shar e. This is basically achieved by: Acquisitions & merger s and joint ventur es in other countr ies and technological im pr ovements
V.
Threat of Substitutes:
It has many substitutes that might pose a thr eat Has less diver sific ation wit h the sector s, so that concentrated focusing on the r es pective sector avoids chance of getting substituted. Ex: Power sector equi pments, industr y equi pments
MACRO ENVIRONMENTAL FACTORS - BHEL: Political Factors:
BHEL being a public sector under taking is gr eatly influenced by the politic al for ces. Ther e is a change in policies ever y time the gover nment changes. The business decisions ar e steer ed to a gr eat extent based on the individual pr efer ences of the new leader shi p. The com pany does big business o ver seas and these pr o jects ar e dir ectly de pendent on the incumbent r uler ¶s inter nationa l trade policies. T he gover nment policies and r egulations r elating the com pa ny¶s client industr ies can l argely affect the futur e of its business wit h these customer s. For exam ple, power sector has seen a massive gr owt h in the last few year s and has been at t he to p of t he political agenda. Now power com panies ar e t he major clients of BHEL. Economic Factors:
The economic boom in India par ticular ly in the last one decade has played a significant r ole in char ting the success of the com pany. Power Generation is one of t he pr imar y indices of a countr y¶s economic develo pment. Tur n key pr o jects ar e the need of the hour and BHEL has pr oven tur nkey capa bilities for executing power pr o jects f r om Conce pt-to Commissioning. Social Factors:
Com panies ar e taking mor e inter est in corporate social r es ponsibility these days and ste ps have been taken by BHEL too to fur ther the same. Its contr ibutions towar ds CSR till date include ado ption of villages, f r ee medical cam ps/char ita ble dis pensar ies, schools for the underpr ivileged and handicapped childr en, ban on child la bor , disaster /natural calamity aid, Em ployment for handicapped, Widow r esettlement, Em ployment for Ex-serviceman, irr igation using tr eated sewage, pollution checking cam ps, plantation of millions of t r ees, energy saving and conservation of natural r esour ces thr ough envir onmental management. Com panies that ar e sensitive to the needs and develo pment of the society nor mally draw peo ple¶s attention and r es pect f aster and can cr eate a su per ior moral image in the minds of t heir par tner s and clients, the same showing mor e inter est in wor king with an ethical and socially conscious gr ou p. Technological Factors:
BHEL being an engineer ing and manuf actur ing giant is to a gr eat degr ee dr iven by technologica l develo pments and innovations and has its e ar nest effor ts dir ected towar ds im pr oving its technological pr owess to meet the changing r equir ements of a gr owing economy. At the same time the com pany has to kee p pace with the develo pments happening in its business ar eas, else it will be knocked out by the com petitor s. BHEL has been a leader always and the f act t hat India¶s fir st undergr ound metr o at Kolk ata r uns on dr ives and contr ols su pplied by BHEL is a testimony to this. The Com pany has pr oven ex per tise in Plant Per for mance Im pr ovement thr ough r enovation and u p-rating of a var iety of power plant equi pments to im pr ove the per for mance of
existing plants. It has also emerged as a major su pplier of contr ols and instr umentation systems for var ious power plants and industr ies. Environmental Factors:
BHEL is an envir onment f r iendly com pany in all its activities, pr oducts and services besides pr oviding safe and healthy wo r king envir onment to all its st akeholder s. T he de pleting water and energy r esour ces ar e a cause of concer n for all. BHEL has taken cer tain measur es to conserve these pr ecious r esour ces. It has set u p rainwater Harvesting Plants and Energy Conservation Pr o jects utilizing efficient technologies.
Pr o per dis posal of Chemical and other wastes is also a major concer n for which the com pa ny has put u p Chemical storage and dis posal plants. The com pany has made the pr inci ples of the Global Com pact pr ogram of t he United Nations a par t of its st rategy, cultur e and day-to-day o perations.
BHEL and its famous SBU
The Ceramic Business Unit (CBU) of BHEL is a Strategic Business Unit for Ceramics and Systems. This business unit deals wit h High Tension Insulator s, Ceramic Wear Resist ant liner s, Industr ial Ceramic Pr oducts and associated Systems. CBU is headquar ter ed at Bangalor e.
BHEL¶s initiatives for 2009-10
The initiatives taken by BHEL ar e in the for m of Joint ventur es: JV Company Toshiba
Venture details NTPC r equi pments Transmission equi pments NPCIL ar power equi pments
Powe Nucle
Initiatives by Competitors
ABB has set u p a global corporate R&D center in Bangalor e which focuses on industr ial IT develo pment and de ployment. Its Indian subsidiar y is a global f actor y for high voltage 72.5 KV cir cuit br eaker s, medium voltage outdoor cir cuit br eaker s and magnetic actuator s. Cummins, taking advantage of India¶s technical know-how has o pened a new R&D centr e in Pune, Cummins Resear ch & Technology India Pvt Ltd, which would offer engineer ing design and analysis capa bilities for the com pany¶s technical center s wor ldwide.
External Factor Evaluation Matrix BHEL EFE ±BHEL(2010)
Key External Factors
Weight
Rating
Wtd Score
Opportunities
1. Capital Goods mar ket segment to gr ow @40%
0.15
4
0.60
2. The power sector r efor ms ar e ex pected to pick u p in the near futur e in India, which would dir ectly benefit BHEL
0.10
2
0.20
3. The disinvestment plans of the gover nment would br ing in new r esour ces and ex per ience into the com pany
0.15
3
0.45
4. For mation of business gr ou ps and tie u ps for joint bidding
0.20
3
0.60
5. NTPC is planning additional capacities to the tune of 2,800 MW, at a cost of Rs 52 billion. Significant por tion of the pr o ject of NTPC is handled by BHEL. (85% of the NTPC pr o jects wer e assigned to BHEL only)
0.20
4
0.80
6. Incr ease in defence budget will incr ease the business pr os pects for the com pany
0.20
1
0.20
Tot al
1
2.85
EFE ± BHEL (2010)
Weight
Rating
Wtd score
1. The com pany is de pendent on NTPC to a gr eat extent.
0.20
3
0.60
2. The gover nment has per mitted the im por t of second hand capital goods that ar e 10 year s old without the need for a license.
0.05
1
0.05
3. Emergence of new player s in the mar ket like Schneider etc.
0.20
2
0.40
4. Political pulls & pr essur es may jeo par dize gr owt h of the com pany
0.10
2
0.20
5. La bour in the Indian Capital Goods sector is highly cost com petitive. The la bour cost efficiency (which captur es the cost and pr oductivity as pects of la bour ) for Indian Capital Goods sector is 1.32 times that of China¶s and 1.38 times that of Taiwan¶s.
0.05
2
0.10
6. R aw mater ial pr ice indices have r isen f aster than the machiner y pr ice index. Wit h the dismantling of var ious pr ice contr ols, Indian Capital Goods manuf actur er s now pr ocur e raw mater ials at mar ket pr ices, which move in line with inter national pr ices.
0.15
3
0.45
7. India has a number of high quality R&D institutions, but the BHEL±institute interactions ar e low and brain drain f r om India, r educe the chances of cr eation of commer cially technologies.
0.25
3
0.75
Tot al
1
Key External Factors
Threats
2.65
KSFs - for Future Competitive Success
1) Power pr o jects ar e ty pically awar ded thr ough the Inter national Com petitive Bidding (ICB) r oute, wher e pr icing is an im por tant cr iter ion in awar ding the contract. Cost com petitiveness is de pendent on f acto r s such as access to technology at low costs, local manuf actur ing f acilities r esulting in lower f r eight costs, low man power costs and efficient pr ocur ement and pr ocessing practices. 2) As the shar e of Inde pendent Power Pr oducer s in new capacity additions incr eases over the long ter m, the a bility to pr ovide finance and take u p equity stakes in these pr o jects will influence the com petitive position of Power plant equi pment manuf actur es. 3) Power pr o jects ar e long gestation pr o jects involving significant r isks r elating to pr o ject com pletion and im plementation. The past track r ecor d of t he PPE manuf actur er in the countr y and in inter national mar kets also plays an im por tant r ole in winning pr o ject bids. 4) The Power , Plant and Electr ic industr y is technology intensive, wit h significant investments r equir ed in R&D to im pr ove efficiency and per for mance, and kee p pace with technologica l develo pments in the sector . The a bility and r esour ces to invest in r esear ch is a significant com petitive advantage for BHEL in the PPE industr y.
BHEL AND THE GLOBAL MARKET - OPPORTUNITY FOR BHEL
Bharat Heavy Electr icals Ltd is planning to tr i ple ex por t or der s to Rs10300 cr or e by 2012. BHEL curr ently has or der s wor th Rs1.10 tr illion. Its inter national pr o jects contr ibuted Rs 3,200 cr or e till date to Rs 24,000 cr or e wor th of or der s generated in the fiscal year that began in A pr il. While organic gr owth is ex pected to contr ibute Rs 6200 cr or e to its or der book by 2012, the r emaining Rs 4,100 cr or e will come f r om acquisitions and joint ventur es. This is ex pected to go u p to Rs 8,000 cr or e each (t hr ough organic and inorganic gr owth) by 2017.
Overseas Business 8000 6200
6000 4000
Overseas Business 2000 0
704 2006
1071 2007
1020 2008
2012
Char t showing BHEL¶s over seas business
FUTURE OUTLOOK OF THE INDUSTRY:
Indian engineering industry *Indias comparatively
*A
cheaper and skilled workforce can be eff ectively utilized to set up large low cost production bases for domestic and export markets
larger number of domestic as well as international players *Highly competetive industry
*Huge
investments f rom the companies for R&D etc
Firm strategy,structure&
rivalry
Factor Conditions
Government
*Liberalized
Demand Condtions
Related & Supporting industries
*Consumers
overall policy regime
include power utilites, Industrial majors(ref ining,auto,textile) government &retail consumers
*Import
duties on a range of equipment have been reduced
*Highy
demanding consumers
*Heavy
electrical industry has been de-licensed with 100% FDI allowed *Demand linked
to the industry growth
*The
focus to develop road,ports,improve power generation etc.
*India
has well developed teritary and technical institutions *Well
developed vendor base
BHEL Analysis of competitive advantage of the firm:-
1) BHEL is a single sour ce for multi ple solutions of Inf rastr uctur e & Industr ial sector s of the economy. It pr ovides solutions in t he field of power ,transmission,trans por tation,Oil&Gas to name a few 2) A major manuf actur er of power plant equi pment for var ious fuels. 3) Fully indigenized technology u p to 600 MW f r om wor ld leader s. 4) Continuously enhancing manuf actur ing capacity U pto 15GW by 2010. 5) BHEL is br idging the skill deficit and training high pr essur e welder s of contractor s 6) BHEL is technological ahead of other com panies in the sector like IGBT technology being pur sued in trans por tation and is the sole su pplier in wor ld for 420 kN/320 kN por celain insulator s for 800 kV HVDC lines and has TCA wit h Sheffield Forgemaster s UK fo r Forgings 7) BHEL has applied innovation in mar keting and su pply chain wit h par tner shi ps forged with NTPC, KEL & HEC and enhancing vendor base & balance of plant. Its applying IT to manage su pply chain management thr ough SAP/ERP, e- pr ocur ement and r ever se auctioning. 8) MoU with GE-Hit achi for coo peration in nuclear island equi pment for Power plants to be set u p by NPCIL. 9) MoU with BEL for for mation of a JV to addr ess Solar Photo voltaic business. MoU with Toshiba Japan cover ing Transfo r mer GIS for EHVAC & UHVAC range etc. MoU with GE for Diesel Electr ic Locos & mf g. of pr o pulsion systems 10) Mar ket capitalisation of over One Tr illion r u pees. 11) Significant gr owth in Intellectual Capital; one Patent/Co pyr ight filed ever y alter nate wor king day. 12) Rs. 2311 Cr or e ex por t or der s f r om twenty six countr ies. 13) Br eakthr ough in trans por tation business wit h bulk or der for 50 nos. 25 KV Electr ic Locomotive ty pe WAG 7 f r om Indian R ailways. 14) Forays in new mar kets ± Belar us, Senega l, Rwanda & new mar ket segments in Syr ia, Tajikist an, Japan, Niger ia. Pr esently executing 40 contracts in 25 countr ies
Internal Factor Evaluation Matrix BHEL IFE ±BHEL(2010)
Key Internal Factors
Weight
Rating
Wtd. Score
Str engths 1. Good corporate Image & esta blished brand name
0.20
4
0.80
2. Single sour ce for multi ple solutions fo r Inf rastr uctur e & Industr ial sector
0.20
4
0.80
3. Possessing technology & design a
bility
4. Str ong & wide networ k of man power acr oss India
0.15
1
0.15
2
0.30
1. Role clar ity on the r equir ement of being an equi pment su pplier or a solution pr ovider
0.10
4
0.40
2. BHEL being a public sector com pany var ious pr ocesses for pr ocur ement and su pplying ar e cumber some and ar e sub jected to auditing
0.05
2
0.10
3. Bur eaucratic st r uctur e
0.15
3
0.45
Tot al
1
Weakness
3
0.15
The scor e of 3 indicate that BHEL is a bove average in their overall inter nal strategic position. Financial Analysis
The Com pany follows Straight Line Method (SLM) of de pr eciation to value the fixed assets. SLM is the commonly used method of de pr eciation used in India. Since BHEL is an Indian Com pany, it too follows the follows Straight Line Method (SLM) of de pr eciation to value the fixed assets. BHEL
does not have any commitments and contingencies. This is because it is t he Numer o Uno in the Capital Goods industr y. It is also generating incr easing pr ofits year by year .
Dividend Per Share of BHEL & top 4 competitors 30
25 Dividend Per Share(BHEL) 20 Dividend Per Share(L&T) 22 13 17 10.5 12.5 15
Dividend Per Share(Suzlon) Dividend Per Share(BGR ENERGY)
10
Dividend Per Share(BEML) 5
0 1
2
3
4
5
X axis r e pr esents year f r om 2005 to 2009 Y axis r e pr esents r u pees in cr or es BHEL is constantly paying dividends to its shar e holder s and the closest to paying dividends is L&T.
Operating Profit Margin (%) of BHEL & top 4 competitors 30 25
Operating Prof it Margin(%)(BHEL) 20
Operating Prof it Margin(%)(L&T)
15
Operating Prof it Margin(%)(Suzlon)
10 5
Operating Prof it Margin(%)(BGR Energy)
0
Operating Prof it Margin(%)BEML) Mar '05
Mar '06
Mar '07
Mar '08
Mar '09
-5 -10
Y axis r e pr esents r u pees in cr or es O perating Pr ofit margin has decr eased considera bly in the last two year s. An ar ea of concer n for BHEL.BHEL should concentrate on using technology & methodology which can incr ease o perational efficiency. Gross Profit Margin (%) of BHEL & top 4 competitors 30 25
Gross Prof it Margin(%)(BHEL)
20 Gross Prof it Margin(%)(L&T) 15 Gross Prof it Margin(%)(Suzlon)
10
Operating Prof it Margin(%)(BGR E nergy)
5 0
-5
Operating Prof it Margin(%)BEML) Mar '05
Mar '06
Mar '07
-10
Y axis r e pr esents r u pees in cr or es
Mar '08
Mar '09
Gr oss Pr ofit has decr eased in the year 2008 & 2009. One of the f actor s can be due to decr ease in demand of Capital goods due to the economic slowdown in 2008. Debt-Equity ratio of BHEL & top 4 competitors 3.5 3 2.5 Debt Equity Ratio(BHEL) 2
Debt Equity Ratio(L&T) Debt Equity Ratio(Suzlon)
1.5
Debt Equity Ratio(BGR Energy) 1
Debt Equity Ratio(BEML)
0.5 0 Mar '05
Mar '06
Mar '07
Mar '08
Mar '09
Y axis r e pr esents r u pees in cr or es Debt-Equity ratio for BHEL is one of t he lowest in the industr y. It is efficiently using its financial r esour ces. In the year 2008 & 2009 it has decr eased to 0.1, indicating that it can again go for debts as and when r equir ed, de pending on the r equir ements of futur e pr o jects. Inventory turnover ratio of BHEL & top 4 competitors 180 160 Inventory Turnover Ratio(BHEL)
140 120
Inventory Turnover Ratio(L&T)
100 Inventory Turnover Ratio(Suzlon)
80 60
Inventory Turnover Ratio(BGR
40
E nergy)
20
Inventory Turnover Ratio(BEML)
0 Mar '05
Mar '06
Mar '07
Mar '08
Mar '09
Y axis r e pr esents r u pees in cr or es
BHEL is a ble to efficiently manage its inventor y as its one of t he lowest in the industr y. Earning Per Share of BHEL & top 4 competitors 120 100 80
Earnings Per Share(BHEL) Earnings Per Share(L&T)
60
Earnings Per Share(Suzlon)
40
Earnings Per Share(BGR Energy) Earnings Per Share(BEML )
20 0 Mar '05
Mar '06
Mar '07
Mar '08
Mar '09
-20
Y axis r e pr esents r u pees in cr or es The r ecent decr ease in ear ning per shar e in the year s 2008 & 2009, is due to the f act that BHEL pr o ject take tur n key pr o jects for com pletion , which have high gestation per iod so it may take sometime to get r etur ns. EPS is highest for L&T.
Annexures: ------------------- in Rs. Cr. ------------------Balance Sheet
Suzlon BHEL
BGR
Lar sen
BEML
Energy
Energy
Mar '09 Mar '10 Mar '10
Mar '09
Mar '10
Tot al Shar e Capital
489.52
120.44
311.35
72.00
41.77
Equity Shar e Capital
489.52
120.44
311.35
72.00
41.77
Shar e A pplication Money
0.00
25.09
15.72
0.00
0.00
Pr efer ence Shar e Capital
0.00
0.00
0.00
0.00
0.00
Reserves
12,449.2918,166.115,277.24
489.15
1,996.07
Revaluation Reserves
0.00
0.00
0.00
Networ th
12,938.8118,311.645,604.31
561.15
2,037.84
Secur ed Loans
0.00
955.73
635.98
753.05
Unsecur ed Loans
149.37
5,845.10 3,710.06
71.82
155.50
Tot al Debt
149.37
6,800.83 7,601.22
707.80
908.55
25,112.4713,205.53 13,088.18
1,268.95
2,946.39
Sources Of Funds
Tot al Lia
bilities BHEL
0.00
Lar sen
0.00
3,891.16
Suzlon EnergyBGR EnergyBEML
Mar '09 Mar '10 Mar '10
Mar '09
Mar '10
Gr oss Block
5,224.43 7,235.78 1,355.74
113.17
798.71
Less: Accum. De pr eciation
3,754.47 1,727.68 438.58
22.12
524.84
Net Block
1,469.96 5,508.10 917.16
91.05
273.87
Application Of Funds
Capital Wor k in Pr ogr ess
1,212.70 857.66
Investments
52.34
Inventor ies
5.42
32.21
4.78
8.20
7,837.02 1,415.37 797.80
12.48
1,653.00
Sundr y Debtor s
15,975.5011,163.702,986.81
1,278.02
1,360.74
Cash and Bank Balance
1,950.51 1,431.87 469.32
15.85
567.15
Tot al Curr ent Assets
25,763.0314,010.944,253.93
1,306.35
3,580.89
Loans and Advances
4,616.67 12,662.554,187.79
671.15
502.89
Fixed De posits
8,364.16 0.00
594.98
0.00
Tot al CA, Loans & Advances38,743.8626,673.498,571.62
2,572.48
4,083.78
Deffer ed Cr edit
0.00
0.00
1,337.12
892.24
Curr ent Lia
0.00 bilities
10.38
13,705.357,592.60
0.00
129.90
0.00
19,443.773,641.87 23,415.10
Pr ovisions
4,975.58 2,188.36 244.36
67.67
560.88
Tot al CL & Pr ovisions
28,390.6821,632.133,886.23
1,404.79
1,453.12
Net Curr ent Assets
10,353.185,041.36 4,685.39
1,167.69
2,630.66
Miscellaneous Ex penses
0.00
0.00
1.45
Tot al Assets
13,088.1825,112.4713,205.53
1,268.94
2,946.39
Contingent Lia Book Value (Rs)
bilities
0.00
0.00
2,546.25 1,719.39 2,572.67 264.32
303.66
35.90
17.08 77.94
179.84 489.34
------------------- in Rs. Cr. -------------------
BEML
Suzlon Energy
BEML
AIA Engineer ing
Lar sen
Mar '09
Mar '10
Mar '10
Mar '10
Mar '10
Net Pr ofit Befor e Tax
12 mths
12 mths
12 mths
12 mths
12 mths
Net Cash Fr om O perating Activities
387.47 -799.67
320.64 186.30
5880.67
Net Cash (used in)/f r om Investing Activities
2423.62 412.40
98.18 86.86
5482.75
Net Cash (used in)/f r om Financing Activities
-37.94 -2596.53
-28.06 -113.26
6071.73
Net (decr ease)/incr ease In Cash and Cash Equivalents
192.75 571.85
233.52 -66.03
1245.56
O pening Cash & Cash Equivalents
398.37 257.59
303.64 -92.43
656.58
Closing Cash & Cash Equivalents
521.10 70.95
263.51 219.19
775.29
Cash Flow
Profit & Loss account
------------------- in Rs. Cr. -------------------
BHEL
Lar sen
Suzlon EnergyBGR EnergyBEML
Mar '09 Mar '10 Mar '10
Mar '09
Mar '10
Sales Tur nover
28,504.0537,418.633,504.34
1,932.42
2,974.65
Excise Duty
1,889.69 317.31
10.32
136.41
Net Sales
26,614.3637,101.323,504.34
1,922.10
2,838.24
Other Income
1,017.86 2,158.75 -182.59
31.53
137.41
Stock Ad justments
1,151.54 -422.99 -254.97
1.61
150.99
Tot al Income
28,783.7638,837.083,066.78
1,955.24
3,126.64
R aw Mater ials
15,587.439,613.98 2,284.16
1,351.73
1,829.90
Power & Fuel Cost
341.82
1.66
31.69
Em ployee Cost
2,982.63 2,379.14 181.01
73.14
555.14
Other Manuf actur ing Ex penses2,086.06 18,147.09235.23
168.34
16.80
Selling and Admin Ex penses 2,414.84 0.00
371.27
57.67
91.96
1,462.74 369.25
29.39
200.38
-36.25
0.00
0.00
1,681.93
2,725.87
Income
0.00
Ex penditur e
Miscellaneous Ex penses
165.12
Pr eo perative Ex p Capitalised 0.00 Tot al Ex penses
334.08
3.93
0.00
23,577.9031,900.783,444.85 BHEL
Lar sen
Suzlon EnergyBGR EnergyBEML
Mar '09 Mar '10 Mar '10
Mar '09
Mar '10
O perating Pr ofit
4,188.00 4,777.55 -195.48
241.78
263.36
PBDIT
5,205.86 6,936.30 -378.07
273.31
400.77
Inter est
30.71
PBDT
505.31
91.65
48.93
5,175.15 6,430.99 -1,112.42
181.66
351.84
De pr eciation
334.27
383.65
126.27
7.00
32.22
Other Wr itten Off
0.00
30.95
0.00
0.00
0.00
Pr ofit Befor e Tax
4,840.88 6,016.39 -1,238.69
174.66
319.62
Extra-or dinar y items
96.64
0.00
2.46
PBT (Post Extra-or d Items)
4,937.52 6,014.00 -1,238.69
174.66
322.08
Tax
1,799.31 1,640.87 175.40
59.56
99.23
Re por ted Net Pr ofit
3,138.21 4,375.52 -1,414.09
115.09
222.85
Tot al Value Addition
7,990.47 22,286.801,160.69
330.20
895.97
Pr efer ence Dividend
0.00
0.00
0.00
0.00
0.00
Equity Dividend
832.18
752.75
0.00
21.60
41.64
Corporate Dividend Tax
141.43
110.25
0.00
3.67
7.08
-2.39
734.35
0.00
Per shar e data (annualised) Shar es in issue (lak hs)
4,895.20 6,021.95 15,567.32
720.00
416.45
Ear ning Per Shar e (Rs)
64.11
72.66
-9.08
15.98
53.51
Equity Dividend (%)
170.00
625.00
0.00
30.00
100.00
Book Value (Rs)
264.32
303.66
35.90
77.94
489.34
SWOT ANALYSIS Strengths
Good corporate image & esta blished Brand Name
Com plete range of pr oducts for transmission and distr ibution
Str ong r elationshi p with NTPC is a str ength as NTPC is planning a capacity ex pansion of Rs. 52 bn and based on the past, 85% of NTPC pr o jects have been bagged by BHEL. The com pany also en joys pur chase pr ice pr efer ence.
Consider ed to be having design a bility
Weaknesses
The pr ocur ement pr ocess in the com pany is cumber some and sub ject to auditing
Low ex posur e to the needs and dynamics of distr ibution business
Role clar ity on the r equir ement of being an equi pment su pplier or a solution pr ovider
Acce ptance of customer s to execute low value high volumes jobs. Being a public sector com pany BHEL is suffer ing f r om sub o ptimality of contr ol due to:
i. Dis placement of social ob jectives by political ob jectives, which may lead to r edundant costs and also r ising costs. ii. Dir ect political intervention in manager ial decision over an ar m length r elationshi p that would r estr ict gover nment¶s task of setting appr o pr iate manager ial incentive str uctur e. iii. Pr ivate goals that lead to budget gr owth and em ployment gr owth. iv. Inter nal inefficiencies in bur eaucratic activity
Larger deliver y cycles in com par ison with inter national su pplier s of similar equi pment.
Ina bility to pr ovide su pplier ¶s cr edit, soft loans and financing of power pr o jects Non pr oductive wor king envir onment and incr eased of pr ivate sector par tici pation.
Opportunities
BHEL has huge investments o ppor tunities in inf rastr uctur e by gover nments & large
organizations leading to gr eater demand of goods & services. Ageing power plants would give r ise to mor e s par es and services business. Incr ease in demand ( par t of economic r ecover y pr ocess) leading to industr y o perating at full capacity.
For mation of business gr ou ps & tie-u ps for joint bidding.
Ear ly bir ds to lear n f aster and thus achieve r e peat or der s
Demand for power and hence plant equi pment is ex pected to gr ow
Incr eased exter nal commer cial borr owings o ppor tunities leading to better payment o ptions.
Threats
BHEL has number of small contractor s leading to pr ice war s & loss of business.
Emergence of new player s in the mar ket and old player s becoming str ong and eating away a par t of the mar ket shar e Politica l pulls a nd pr essur es ma y jeo par dize the whole pr ocess, raising a lar m a bout t he pr ivatization and being anti- peo ple
Incr eased thr eats f r om Chinese manuf actur er s.
Strategies to capitalize the strengths
Having a good brand image and pr oduct por tfolio, t hey should aggr essively defend and incr ease the mar ket shar e.
Im pr ove inter nal efficiency and pr oductivity of the em ployees of BHEL.
Strategies to im pr ove t he weakness Im pr ove the s peed and quality of pur chases as the com petition in t his range is with small contractor s
To cr eate channel par tner s rather than o perate as individual com panies
Strengths opportunities (SO) strategies
Incr ease mar ket shar e aggr essively
Pr esent a better way of per for ming the jobs in tune with the esta blished brand name
To addr ess t he demand in all the par ts of nation to gain wide s pr ead ex per ience and ex ploit t he o ppor tunities
To offer design solutions to t he customer s
Invest money in the pr ocess to have financial advantage
Weakness opportunities (WO) strategies
Im pr ove pr ocur ement cycle and r educe the pr ocess difficulties
Execute pilot pr o jects to gain ex per iences and minimize r isks
Strengths Threats (ST) strategies
To incr ease lobbying with the gover nment to pr event extension of pur chases pr efer ence and maintaining level playing field in t he segment.
To check the emergence of new player s and be well pr e par ed to counter them
To be cautious in the event of change of t he gover nment and the pr ocess of r efor ms f alling off the track.
Weakness Threats (WT) strategies
Reduce costs to incr ease margins
To train man power to counter the thr eats of enhanced com petition and to execute the job efficiently
BHEL in or der to get considera ble and pr ofita ble shar e in the incr easing com petitive mar ket, need gr eater em phasis on the following ar eas
Incr easing mar ket shar e aim to incr ease penetration.
Pr ice Com petitiveness
Brand building exer cise- To gain customer s confidence in the distr ibution business also
The a bove can be achieved thr ough Incr eased level of public r elations wit h the customer thr ough dedicated mar keting and sales team.
BCG MATRIX
BHEL has its contr ibution ar e 6 sector s. These sector s ar e as follows:
1. Power 2. Transmission 3. Industr ies: Petr ochemicals 4. Refiner ies, Cement etc. 5. Oil and Gas 6. Non-Conventional energies 7. Trans por tation
Power sector:
BHEL is the to pmost pr oducer of boiler s wit h two thir d mar ket shar e and even tur bines and generato r s ar e manuf actur ed making them the mar ket leader .
Transmission sector:
The t ransmission sector comes under the industr y segment which cater s to 22% of BHEL¶s indust r y segment. It consists of gas insulated substation SBU and transfo r mation SBU which holds a good mar ket shar e and the gr owth in this sector is much mor e than power sector which is 40% y-o-y. Thus these ar e t he question mar k pr oducts of BHEL and should be invested u pon mor e to br ing it to st ar position. It should invest mor e in technology to sust ain com petition in this sector and saving it f r om becoming a dog pr oduct.
Refineries and cement sector:
The cement sector does not have any individual player who accounts for mor e than 12% of mar ket shar e. But the gr owth of cement sector has dr o pped to 10.43%. Hence, BHEL with a small mar ket shar e in a slow gr owth mar ket is a dog SBU. The r efiner ies SBU takes a good shar e of the mar ket and it is gr owing rapidly in India at 62% which accounts to a high gr owth. Thus with a high mar ket shar e and high gr owth this is a star SBU for BHEL and it should r eap u pon the most on it.
Oil and Gas sector:
The oil and gas sector is gr owing by 45% in which the major contr ibution is of gas sector . Since BHEL is one of the oldest pr oducer s of dr illing equi pments it has a good mar ket shar e in its su pply. But due to cheap and technologically better equi pments su pply f r om inter national level, BHEL has lost significant mar ket shar e. Due to the high gr owt h mar ket and decr easing mar ket shar e it is a question mar k pr oduct now and BHEL should decide f ast whether to invest mor e and im pr ovise mar ket shar e or divest f r om t his sector . The BCG matr ix can be pr esented as follows:
Non conventional energies:
The r enewa ble energy sector es pecially wind energy is seeing a massive gr owth y-o-y. Thus it¶s a highly gr owing mar ket. But due to many pr oducer s of equi pments and for eign com petition BHEL has not succeeded to secur e a high mar ket shar e. In f act all pr oducer s hold mor e or less similar mar ket shar e. But due to the over seas ex pansions of BHEL it has a high mar ket shar e in this sector . Thus this is on t he verge of becoming a star pr oduct for BHEL.
Analysis of major strategies Strategy1:- BHEL has decided to enter into continent of Af r ica. Bharat Heavy Electr icals Ltd (BHEL) has secur ed diamond, cobalt and ir on or e mines in the Democratic Re public of Congo. Analysis: - The a bove point is listed as an o ppor tunity in SWOT analysis as huge investments by gover nments in inf rastr uctur e. In India BHEL is a ble to get or der s for su pply of equi pments like boiler s, tur bines etc. But in Af r ica it has got a bigger or der that of EPC (engineer ing, pr ocur ement, and constr uction) contract. It is also leveraging India¶s r elation with Af r ica and enhancing di plomatic r elation.
Although ther e ar e political uncer tainties in countr ies such as Congo, w hich may affect this arrangement. It may be difficult for the arrangement to wor k out so BHEL should look or der s f r om other politically sta ble countr ies. Strategy2:- BHEL to acquir e Czech power plant Analysis: - Listed in SWOT analysis fo r mation of joint ventur es. BHEL f ailed in acquir ing Czech power plant equi pment-maker Skoda Power because its bid was ar ound 10% lower than Doosan Heavy Industr ies and Constr uction, which finally bought t he fir m.
BHEL is tr ying by way of M&A to get the technology for large tur n key pr o jects and mar ket access to unex plor ed ar eas. Bhel has also been looking at Romanian and Chinese com panies. Strategy3: - BHEL to com pete with over seas vendor s for equi pment su pply or der s for nuclear power pr o jects Analysis:- BHEL has cr edibility and has su pplied state-of-the-ar t power generating equi pment of var ious ratings corr es ponding to near ly 3,280 MW for var ious nuclear power plants. This is a good strategy as it will hel p BHEL get or der s f r om outside and not de pend only on Indian fir ms like NTPC. Also it will hel p BHEL under stand its mar ket standing globally. Startegy4 :-BHEL par tner shi p with NPCIL Analysis:- Listed in SWOT analysis fo r mation of joint ventur es. BHEL has been a major par tner in NPCIL's vision to achieve self-r eliance in nuclear energy and its association wit h NPCIL began in 1970 wit h the develo pment of technology and manuf actur e of pr ototy pe channel cover s and heavy water heater s. Aimed at synergizing the str engths of t he two com panies, BHEL and NPCIL have also r ecently signed a memorandum of under standing to for m a joint ventur e (JV). The JV will carr y out EPC activities fo r nuclear power plants both within the countr y and outside on mutually beneficial ter ms.
It will hel p in the develo pment of BHEL as an indigenous sour ce capa ble of designing and manuf actur ing steam tur bine generator sets of t hese ratings to meet the needs of var ious nuclear pr o jects pr o posed to be set u p in the countr y in the futur e. Although NPCIL will eat some of the pr ofit but it¶s necessar y as t hen they can captur e mar ket as both ar e ex per ts in t heir r es pective ar eas as illust rated when they jointly develo ped tur bine generato r sets and steam generator s at Tarapur . Strategy5:- BHEL units plan to r e-enter defense business Analysis: -Defense is one of the ar eas wher e gover nment allocates large chunk of it¶s money. BHEL can develo p technology so that it can enter into su pplying of equi pments to defense. Strategy6: -BHEL puts in place system of per for mance-based loading Analysis:- Listed in SWOT analysis as a thr eat number of small contractor s leading to pr ice war s and loss of business. It¶s good on par t of BHEL as it will hel p in monitor ing vendor s. Accor ding to the system a vendor who per for ms well in a month will get fur ther or der s. The system will motivate them to per for m better . As BHEL's outsour cing target kee ps incr easing to r each 7.5 lak h tonnes in 2010-11 and 10 lak h tonnes in 2011-12, sub-contractor s will have to inevita bly ex pand their capacities t hr ough technology u p gradation. Strategy7 :-Time-saving HR systems in BHEL Analysis: - Listed in SWOT analysis as a weakness that wor king envir onment in BHEL is non pr oductive. Bharat He avy Electr icals Limited (BHEL) has taken u p on pilot basis the Release II of HR systems fo r Payr oll, Time Management, Travel Management, Em ployee Self Service, Manager Self Service and Pr oduct Develo pment based on SAP model in the Power Sector Souther n Region, Chennai, and the Tir uchi unit.
It will hel p augment pr oductivity of BHEL. It is aimed at aimed at fulfilling the long-felt need to synergize and integrate human r esour ce function acr oss t he organization to leverage maximum benefits. Besides r eaching out to inter nal customer s for their r equir ements on r eal-time basis, they would also play an incr easing r ole as strategic par tner in business. The system would hel p in taking quicker decisions Strategy8: - BHEL nuclear ex per tise Analysis:- Bharat Heavy Electr onics Limited (BHEL) is f acing difficulties in secur ing timely su pply of basic raw mater ials fo r its manuf actur ing units and its su pply commitments for power pr o jects envisaged for commissioning in the Eleventh Five-year Plan. BHEL should build su pplier s r elations well. BHEL should concentrate on less number of su pplier s and long ter m r elationshi ps (like Toyota). This non availa bility of raw mater ials is adver sely affecting BHEL & putting a question mar k in building equi pments for power plants like r eactor s.
Startegy9:- Im plementation of Shar e point por tal Analysis: - It is a good strategy and save cost of integration & de ployment time. Integrate Sear ch & document management with ever y day tools- Micr osoft inter net Ex plor er & Micr osoft office Cr eate a division por tal website. application to hel p ,cr eate, manage and shar e content. Bidding for inter national and national power pr o ject, pr ocur ing, integrating all system and deliver ing a com plete pr o ject to the customer within a sti pulated timef rames will become easy. Will hel p im pr ove t he intra- team colla boration. Startegy10: - Vendor develo pment Analysis: - Vendor develo pment of 200 vendor @ Har dwar is conducted which hel ps in im pr oving r elation between BHEL and vendor s. Startegy11: - Resear ch and Develo pment Strategy Analysis:- The R&D effor ts have made significant contr ibutions to almost all ar eas of o peration of BHEL; a few among them ar e: y
Atmos pher ic Bubbling fluidized bed Combustion (FBC) boiler u p to 100 tones/hr .
y
Dir ect Ignition of Pulver ized Coal (DIPC).
y
Ceramic liner s for a brasion r esist ance application in ther mal power plants.
MODULE 3: PROJECTED FUTURE OF BHEL:
REVENUES: 50000 CRORE FOR THE FINANCIAL YEAR 2012 GROWTH RATE: 20% NO OF EMPLOYEES: 50000 PROFITS: MORE PROFITS IN 2011-12 AND PROFIT MARGIN WILL DROP IN THE YEAR 2012-2013 EXPORTS: ONE SIXTH OF TURNOVER IN 2011-12 MARKET SHARE: 55% IN THE YEAR 2012
PROJECTED BALANCE SHEET:
PROJECTED PROFIT AND LOSS ACCOUNT:
Factors affecting the projected financials: y
y
y
y
y
A dominant position, wide pr oduct por tfolio and str ong r elationshi p with gover nment agencies make BHEL gain advantage over the com petitor s with aggr essive power capacity addition targets set for the XI and XII five year plans. BHEL en joys 54% shar e in the XI plan power or der s and or der book size of 1, 43,800 cr or e in the financial year 2010 and ther eby the com pany has str ong sales visibility in t he coming year s.
New or der s ar e ex pected to slow down in the coming year s since 45% of XII plan or der s have alr eady been placed. Robust gr owth r evenues due to enhanced execution capa bilities (c apacity incr eased by 50% dur ing 2008-2010 to 15 GW). BHEL is well positioned to bag su per cr itical or der s due to its technological par tner shi ps, joint ventur es with state electr icity boar ds.
y
y
y
y
BHEL or der book will peak in the financial year 2011 since 45% of XII plan power equi pment or der s have been alr eady placed (54% shar e of BHEL). Hence ther e is limited sco pe for gr owth in the or der book in the futur e.
Rise of commodity pr ices, com petitive pr essur es and higher im por t content in the pr o por tion of su per cr itical or der s will r educe margins in the financial year 2011. BHEL is the pr eferr ed su pplier of power equi pment for gover nment pr o jects but its shar e in the pr ivate sector is low. BHEL en joys substantial economies of scale with a manuf actur ing capacity that is 2.5 times of its closest com petito r , L&T.
y
Dominant industr y status (63% of t he installed capacity in the financial year 2009).
y
BHEL en joys high EBITDA margins (16.1% in financial year 2009 and 11.5% for L&T).
y
It is debt f r ee with a debt equity ratio of 0.012 in the financial year 2009.
TURNOVER OF 27% CAGR:
CAPACITY ADDITION:
y
Robust gr owth in power demand leading to mor e or der inflows fo r BHEL.
y
High pr ivate sector par tici pation.
y
y
Recently BHEL secur ed the largest or der to date f r om Indian R ailways(990 cr or e) to manuf actur e 150 electr ic locomotives. Industr ial segment r evenue to incr ease in the futur e year s(transmission, trans por t, r enewa ble and nuclear energy)
RISKS AND CONCERNS: y
y
y
L&T, str ongest domestic t hr eat to BHEL, plans to incr ease its pr oduction capacity to 6GW. Incr eased pr ice com petitiveness in the futur e leading to mar ket shar e loss. Low cost Chinese manuf actur er s (No im por t duty on Chinese goods, su per ior quality, timely deliver ies)
y
Slow execution rate by BHEL may r esult in lower new or der gr owth
y
Der egulation may lead to lower or der flows
y
Margin contraction due to higher commodity pr ices
y
Curr ency appr eciation may lead to pr efer ence for im por ted equi pment
STRATEGIES: TECHNOLOGICAL STRATEGIES: y
y
U pgrading its pr oduct engineer ing and manuf actur ing technology base by induction of state of the ar t technologies. U pgrading equi pment and f acilities to maintain quality leader shi p
FUNCTIONAL LEVEL STRATEGIES: y
y
Focusing on initiatives such as design to cost, lean manuf actur ing Pur chase and su pply chain management initiatives thr ough leveraging IT(negotiations thr ough r ever se auctions, e- pr ocur ement)
y
Have suita ble pr oduct capa bilities including manuf actur ing capacities and technologies
y
Long ter m rate contracts(co pper , steel, t ransfor mer , oil)
y
y
Pr e par e the organization for com petition thr ough quality, low cost o perations and efficiencies Assess and build ena bling HRM & Financial Management
