BHEL places first commercial order on BHPV following formal Takeover

As the first step towards revival of Bharat Heavy Plate and Vessels BHPV, Bharat Heavy Electricals Limited BHEL has placed the first commercial order on BHPV following the formal takeover of the company in May, 2008.

The order envisages manufacture and supply of 680 Metric Tonnes of boiler components including Drums, Headers, Riser Tubes, Panels, Coils and Piping products.

The documents to this effect including the documents pertaining to design and quality were handed over in Visakhapatnam by BHEL officials to BHPV officials in the presence of Mr. Anil Sachdev, Director HR, BHEL, Mr. B.P. Rao, Director IS and P, BHEL and Mr. Om Prakash, Managing Director, BHPV.

In view of BHPVs working capital position, BHEL has decided to issue raw material for the above order free of cost. The first batch of raw material has already reached the BHPV works.

As setting up another manufacturing plant needs massive greenfield investments and long gestation time, supporting an existing entity like BHPV makes better business sense for BHEL where economies of scale can be achieved by enhancing capacity with brownfield investments. BHEL plans to load BHPV on a monthly basis based on its performance and capacity.

The market for BHPVs products, especially in process equipment and cryogenics, is expected to grow rapidly. BHPV has been handicapped due to its financial constraints in participating in some tenders, which would be mitigated once the financial restructuring is completed and BHEL takes over.

BHPV is being developed as a dedicated centre for industrial boilers ensuring better delivery. Though the current cost structure of BHPV is similar to BHEL, costs are expected to come down due to factors like increased volumes, better financial capability leading to lower working capital borrowing costs, etc.

With a capital expenditure of Rs.2,360 Million, spread over three years, in addition to induction of experienced manpower and required technology from BHEL, BHPVs turnover is expected to cross Rs.10,000 Million in 5 years.

BHEL has been committed to the nations power development programme and has reaffirmed its commitment to the Indian Power Sector by equipping itself for the future, by way of technology, facilities and trained manpower to meet the countrys power forecast for the 11th Plan and beyond.