We dedicate this issue to V Krishnamurthy (VK). James Boswell said of his hero Samuel Johnson as having the golden touch. VK can be called one such wonder man: all the companies that were steered by him became high performers. He made indelible marks on BHEL, Maruti Udyog and SAIL.
The VK-SVS Raghavan duo took BHEL to commanding heights. It must have been gratifying to VK’s soul that BHEL, after a few continuous years of depressed performance, ended FY 22 with all round improvements: revenue from operations at Rs 21,211 crore was 24 per cent higher than previous years. Profit after tax at Rs 410 crore was a great improvement over the loss of Rs 2717 crore. The company could declare a dividend of 20 per cent after three years. These resulted from efficient execution, cost control and focus on service and quality.
Through the year BHEL commissioned and synchronised 4119 MW of power capacity and 1460 MW of steam generators. The order book at the end of March 2022 was a healthy Rs 102,542 crore.
This turnaround is welcome and characteristic of the standard set by VK-SVS Raghavan. I remember the steep fall in orders for power equipment suffered for a while in the 1970s. The then management saw opportunities for growth in the oil sector triggered by ONGC. BHEL geared up the Hyderabad unit to produce oil rigs/platforms. Soon it also took over the PSU, Bharat Heavy Plate and Vessels Ltd at Visakhapatnam that was struggling to cope with fluctuations in demand for its products from the fertilizer industry. Its location in the port city was also a big help as till then the BHEL production units were located inland.
Coal-based power still constitutes over two-thirds of power production. The concern for environment and the concerted efforts needed to reduce drastically carbon emissions demand moving away from coal as the principal source of energy. This explains the steep drop in orders for power plant equipment on BHEL.
Large companies like Tatas, Mahindras, Bharat Forge and LMW, to mention a few, are creating sophisticated facilities for manufacturing a variety of Defence equipment. SVS Raghavan, a past chairman of BHEL, pointed to the huge capacities for fabrication of heavy equipment at the BHEL plants, notably Tiruchi. BHEL-Hardwar also has large capacity for castings and forgings. Policymakers and the management of BHEL should look at the potential for BHEL utilising its capacity for fabricating Defence equipment.
During the 1970s BHEL recorded a frenetic pace of growth through standardising the designs and scaling up the unit sizes of equipment. Significantly, there was also the focus on winning large orders for power plant equipment including boilers, turbines and generators from a number of developing countries. The goodwill created by successive Indian prime ministers, particularly by Prime Minister Narendra Modi, can be leveraged through bilateral trade agreements and long-term credit.
Over the last six decades and more India has built rich experience in designing, engineering and producing a vast range of power plant equipment. BHEL had the vision and marketing skills to spot and seize opportunities across the globe even in the 1960s and 1970s. Today it should be possible to build on the base laid making use of the boom in exports, especially of engineering goods seen in recent months.
The turnaround witnessed at BHEL last year should goad the top management and policymakers at Udyog Bhavan to emulate the record set by VK in seizing such opportunities.
