Power equipment major Bharat Heavy Electricals on Monday announced an investment of upto Rs 1,000 crore (Rs 10 billion) in the next two years for expanding capacities to meet requirements of 11th and 12th Five-Year Plans.
"We are planning to invest Rs 800-Rs 1000 crore (Rs 8-10 billion) in the next two-and-half years so that by the end of the tenth plan (2007), we are ready to meet the challenges of the 11th and 12th Five-Year Plans," A K Puri, CMD, BHEL, said.
Currently, BHEL is meeting demand for adding about 5000 mega watt annually. However, it has the capacity to add upto 6000 MW a year, Puri said. "Going by the government's plan to add 100,000 MW in the next 10 years, we are looking at a capacity of delivering about 10,000 MW a year."
Puri, however, said investment of Rs 1000 crore was not for any greenfield project but for "de-bottlenecking" the existing capacities and expanding them to meet greater demand.
The fresh investment would be distributed at all the major plants of BHEL at Hardwar, Bhopal, Bangalore and Tiruchirapalli.With an order book of over Rs 30,000 crore, (Rs 300 billion) Puri said BHEL still had the capacity to handle additional orders.
Asked about the impact of Chinese companies entering the Indian market, he said, "There is no need to worry. The Indian market is growing and BHEL is on a strong footing."
The state-run engineering giant recently lost a couple of projects to Chinese power major Dongfang Electric Company. While Dongfang won an order to set up a plant in West Bengal, Reliance Energy outbid BHEL for setting up a turnkey plant in Haryana for which it would source equipment from the Chinese company.
Exuding confidence about BHEL's ability to deal with the increasing competition, Puri said "The Chinese companies came to India about six years back but failed to make any significant impact. They have won a couple of projects now but we are ready to take up the challenge".
On the source of financing the fresh investment, he said it would be met from internal accruals and ruled out tapping the capital market in the near future. Asked whether BHEL was planning to further downsize the manpower to increase efficiency, Puri said, "The exercise to rationalise manpower has been already completed."
BHEL is expecting the demand to rise and with volumes expanding there is no need for cutting down the workforce, he said adding the company is also looking at some overseas projects negotiations for which are on.
"The government is encouraging BHEL, National Thermal Power Corporation and Power Finance Corporation to bid collectively for overseas projects," he said, adding as and when the opportunity comes the trio would pool their resources for international projects.
