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CAG slams BHEL for poor planning

Says it didn't have diversification plans.

New Delhi: The Comptroller and Auditor General (CAG) on Tuesday slammed Bharat Heavy Electricals Limited (BHEL) for not diversifying its business, inadequate effort to increase competitiveness, and improper management of receivables leading to its troubles.

“Power sector continued to account for the bulk of BHEL’s turnover during 2011-12 to 2015-16. As BHEL had not effectively diversified into new/less operated business areas, both turnover and profitability declined sharply with slowdown in power sector,” said CAG.

CAG said BHEL’s turnover which was Rs 49,510 crore in 2011-12 declined to Rs 26,587 crore in 2015-16; while profits of Rs 7,400 crore in 2011-12 turned into a loss of Rs 913 crore in 2015-16.

CAG also said that BHEL could not achieve any of its strategic plan targets till 2015-16 and the shortfall ranged between 23.33 and 113.91 per cent against specific goals. “BHEL could not bridge the technology gap in the core power sector; in particular, circulating fluidized bed combustion, gas turbine, dry type transformers and 500 mva inter connecting transformers,” said the report.
On inadequate efforts for increasing competitiveness, CAG said that the PSU could not secure any of the four tenders finalised against competition during FY16. BHEL’s quoted prices in these tenders were 4.36 to 73.85 per cent higher than L1 prices, it said.

CAG said that rationalisation of staff according to level of operation was essential to maintain margin, competitiveness and business growth as manpower constituted significant component of its expenses. “Despite slowdown in power sector since FY11 and dampening investment sentiments, BHEL inducted 9,346 employees in the CY 2011 and 2012 against retirement of 5,844 employees during this period. As a result, the percentage of employee cost to turnover increased consistently from 11.04 per cent in 2011-12 to 20.84 per cent in 2015-16,” said the report.

BHEL to export to more nations

Bharat Heavy Electricals Limited (BHEL) said on Tuesday that it has forayed into two new countries by securing export orders from Chile and Estonia.
“With maiden orders for transformer bushing from Niquel Electric Ltd, Chile and Electronic cards from SCANFIL OY Vana Sauga, Estonia, BHEL has now expanded its global footprint to 82 countries across all the six inhabited continents,” said the PSU.

BHEL said that it is continuously aligning its export strategy in line with global dynamics.

“Persistent efforts towards globalisation have led to BHEL securing the highest ever export orders of over Rs 10,000 crore from 23 countries in FY17.

“Significantly, the company secured its largest ever export order for setting up the 1,320 MW (2x660 MW) Maitree Super Thermal Power Project in Bangladesh,” said the company. Recently, BHEL also forayed into two other countries in Africa, Togo and Benin.

( Source : Deccan Chronicle. )
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