bhel tp work

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INDUSTRY PROFILE

Engineering

The demand for heavy engineering equipment is derived from user industries such as power, construction,cement, steel, chemicals, petrochemicals and refining. In addition, significant investments in powergeneration, and transmission and distribution (T&D) have driven growth of the engineering goods sector.

Capital goods in the index of industrial production have seen a 34 per cent growth in the period April toJune 2010 over the corresponding period in the previous year. An analysis of the various components ofthe capital goods sector suggests that the growth is no longer led by just a few segments such ascommercial vehicles. It now extends to segments like diesel engines, industrial machinery, protectionsystems, ship building and repair, agriculture implements, power cables, electric motors, power-driven

pumps and material handling equipment. A sharp spurt in the growth of the capital goods sector is anindicator of strong investment activity.

Electric equipments

The electrical equipment industry comprises several products such as transformers, switchgears, motorsand control equipment. In 2009-10, the size of the electrical equipment industry stood at Rs 525 billion.

The electrical equipment industry grew at 11.3 per cent during 2009-10.

The main buyers of electrical equipment are power utilities. A typical electric equipment component has alife of 20-25 years; hence, replacement demand would incrementally add to the growth opportunities.

The raw material cost of electrical equipment manufacturers is estimated at 50-60 per cent of sales.Primary raw materials include copper, aluminium and steel. A few large players dominate the electrical

equipment industry. However, several other small and medium-sized players too specialise in specific

product lines. In addition, there has been substantial competition from Chinese equipments manufacturersespecially in the high voltage category. The electrical equipment industry is highly working-capital

intensive as it takes 4-5 months to recover payments from SEBs, which are their major clients.


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BHEL PROFILE

BHEL was established in 1956 at Bhopal and came into existence in November 1964. At first,nearly 48 years ago at Bhopal, a plant was setup, and that was the genius of heavy electrical

equipment industry in India. BHEL is today the largest Engineering and manufacturing Enterprise of

its kind in India with well recognized track record performance. Right from 1971-72 this organizationis making profit.

Heavy Electricals (India) Ltd was setup in Bhopal in August 1956 with the view to reach self-sufficiency in Industrial products and power equipment which was vital for the industrialization of the

country. To meet the total demand of Heavy Electrical equipment, BHEL came into being in

November 1964.

BHEL is one of the oldest and largest state-owned engineering and manufacturing enterprisein India in the energy-related and infrastructure sector which includes Power, Railways, Transmission

and Distribution, Oil and Gas sectors and many more.

Presently BHEL manufactures about 180 varieties of products under 30 major product groups. Ithas built up an available reputation for high quality and reliability of its equipment.

In BHEL 67.72% of shares are held by the Government of India and 28-32% is held by FinancialInstitutions, mutual funds, insurance company, foreign institutional investors and employees.

BHEL is paying dividend since 1976-77. BHEL has been a profit making company right since itsincorporation and has been making significant contribution to the Governments funds by way of

dividend on the equity, taxes and duties etc.

BHEL has also received Excellent rating for 9 years consecutively in achieving Memorandumof Undertaking targets with Government of India and has been conferred the priceless status of a

Navaratna Company.

Another major contribution of BHEL to the nation is by the way of its involvement in the socialdevelopment work such as adoption of backward villages, buildings and running of schools, medical

centers providing self employment facilities for widows, handicapped persons etc.

BHEL is the 12th largest power equipment manufacturer in the world. In the year 2011, it wasranked ninth most innovative company in the world by US business magazine Forbes


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Product profile

Thermal Power Plants Nuclear Power Plants Gas-Based Power Plants Hydro Power Plants DG-Power Plants Industrial Sets Casting and Forgings Boilers Boiler Auxiliaries Soot Blowers Valves Piping System Seamless Steel Tubes Heat Exchangers And Pressure Vessels Condenser and Heat Exchangers Pumps Desalination and Water Treatment Plants Automation and Control Systems Automation and Control Systems Transmission System Control Traction Drive System Power Semiconductor Devices Solar Photovoltaics Defence Electronics Software System Solution Switchgear Bus Ducts Transformers Insulators Industrial and Special Ceramics Capacitors Bushings On Load Tap Changers (Oltc) Electrical Machines Compressors Control Gear Transportation Equipment Oil Field Equipment Distributed Power Generation and Small Hydro Plants Systems and Services, Industrial Systems.


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Environmental effects on Engineering and Electrical industry

Pertaining to the government

High incidence of indirect taxation Purchase preference in favor of public sector enterprises which results in distortion of market

mechanism. This prevents private sector enterprises from having a level of playing field. Export transaction cost for Indian capital goods are highest in the world. Indian capital goods industry also lags in strong institutional mechanism for export credit and

promotion.

Pertaining to the government

Low labor factor proportion is low when compared to other countries. Raw materials are mostly domestic in origin. Indian capital goods manufacturers have working capital requirements of 45% as against global

benchmark of 15%.

Technological competence of Indian capital goods manufacturers is low.

Negative perceptions about Made in India have damaged the ability of Indian capital goodsmanufacturers to compete at optimal capacity in world markets.

Quality of infrastructure is poor when compared to other developed nations. Low degree of buyer sophistication.

Pertaining to the Firm level

Ownership pattern in Indian capital goods sector is marked by the dominance of public sectorenterprise.

Sub optimal market functioning. Import weights and export weight are low which leads to low competitiveness. Indian firms invest less in marketing activities and have low customer orientation. Research spending is low as a percentage of sales. Operation efficiencies are low.


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Industrial buying activity

Supplier Evaluation, Approval & Review Procedure

The process of source selection consists of following stages:

Information stage

The information about suppliers is received in Supplier Development Cell. Some of the sources of data

are as follows:

a) Supplier approaches directly.

b) Information received through various disciplines of organization such as Engg./MM/ Technology etc.

c) Through Web search/ News papers/ Magazine/ Business Catalogue / Exhibitions/ Seminars / Electronic

media etc.

d) Suppliers technically qualified in Open Tenders

e) Customer/ collaborator recommendation

Assessment Process:

Assessment on the basis of following three criteria:

Organizational Soundness

Organizational Soundness will be judged on the basis of information furnished by the supplier on the

following aspects: General information about organization, which includes:-

a) Ownership information;

b) Financial information;

c) Registration particulars

d) General Manufacturing facilities

e) Industrial relations

Quality System

Quality System will be judged on the following aspects:

a) Incoming material control

b) Process Controlc) Control of Non-conformance

d) Control of measuring & monitoring device

e) Conformance to safety requirement

f) Customer Supplier communication


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Technical Competence

For jobs to BHEL design & technology:The technical competence of supplier will be judged on the basis of his understanding about BHEL

product specification and its criteria, the process capability of the machines available with the supplierand the experience of the manpower For jobs procured on the basis of performance specification (Design

& Technology is of supplier): As design and technology is of supplier, BHEL cannot give thedimensional tolerances but only specify the performance specifications in following manner:

a) Critical performance specifications

b) Major performance specifications

c) Minor performance specifications

While assessing the supplier for performance specification, following should be examined:

(i) Design capability for the product to achieve the desired performance specification

(ii) Quality Control Plan & verification of its implementation & acceptance criteria

(iii) Process capability to produce critical components & major components

(iv) Adequacy of final product testing

Supplier Performance Monitoring And Rating System

Supplier Performance Rating (SPR): Supplier performance shall be assessed taking into account thefollowing main factors and calculated for each consignment / purchase order:

Quality Rating (QR): Quality rating is based on acceptable quantity of

material offered for inspection or delivered by supplier and shall be calculated as: Quality Rating (QR) =(Q1 + 0.75 x Q2 + 0 x Q3) x 60/ Q.

Delivery Rating (DR) Supplier will be rated on delivery parameters wherein Delivery rating shall be 30in case of adherence to PO delivery. For non-adherence to PO delivery (i.e. delay in supply), marks to bededucted in proportion of delay to PO delivery. Deduction = 30*delay in days/PO delivery in days

Service Rating (SR) The criteria for service rating shall be based on the Demerit factor (negative rating)

to be updated by the User/ Quality/ MM group. The service rating shall be 10 in case there is no negativefeedback against the supplier for the given supply. Else, the service rating should be reduced

proportionally based on the Demerit factor

Usage of Supplier Performance Rating:The following action is recommended based on SPR score:-

Rating Weightag

eQuality 60Delivery 30

Service 10Total 100


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SPR Score Grade Action

>95 A1 BHEL may consider award appreciation/ commendation

letter

>90 75=60


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REGISTRATION MATRIX FOR SUPPLIERS OF VARIOUS TYPES

Slno.

TypeofSupplier

Authorityfor initialrecommendation

Assessment Criteria

Authority todecideassessm

entcriteria

Authorityforassessment

Finalrecommendationfor

registration

Approvingauthorityfor

registration

Remarks.

1. MI MISCC /SRC

SRF,TechnicalCompetence & team

visit, ifreqd.

MISCC/ SRC

MISCC /SRC,SupplierAssessm

ent Team

MISCC /SRC

ChairmanMISCC/Constitut

ingAuthority

SRC

Permanentcode orDevelopment code

or Trialcode

2 MF -do- SRF &

team visit,if reqd

-do- -do -do- -do -do

3 SU -do- NotApplicabl

e

NotApplica

ble

NotApplicab

le

-do- -do PermanentCode

4 SURS -do- Same item(Size /

application) / sameclass of

material,

performancefeedback

MISCC/ SRC

MISCC /SRC

-do- -do- SURSwith

permanentcode canonly be

considered

.TechnicalCompetence to be

verified/assessed

5. Reputed

Suppliers

(Clause

5.0 ofChapter V)

MISCC /SRC

Justification for

seekingregistratio

n

MISCC/ SRC

SRF notrequired,

however,statuary

details

shall beaskedfor.

MISCC /SRC

Head ofUnit

Exceptional cases

only


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MISCC - Material Identification & Supplier Control Committee

SRC - Supplier Registration Committee (For Power Sector Regions)

SRF - Supplier Registration Form

TCA - Trained & Certified Assessor

MI - Manufacturer (Indigenous)

MF - Manufacturer (Foreign)

MC - Manufacturer recommended by Collaborator

SU - Sister Unit

SURS - Sister Unit Registered Supplier

NA - Not Applicable

UNITSAll manufacturing units, PS-Regions, PEM, TBG, ISG, ROD etc.

Constituting Authority (CA)


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BHEL customer profile:

Diverse, Loyal and Satisfied


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IPP

BHEL Performance Edge Is Driven By

Lower Auxiliary Power Consumption Boiler Efficiency Lower Design Heat Rate Better PLF Lower Life Cycle Cost

Confidence reposed by IPPs indicateBHELs

Product Quality Execution Capability Service Reliability

Engineering Excellence

Abhijit

ACC

Adhunik

Avantha

Bajaj Hind.

Hindalco

India Bulls

Jaypee Gr

Jindal Power

Sterlite

Tata

Videocon etc.


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Strategies of BHEL

1) Capacity Enhancement2) Accelerated Project Execution3) Product Cost Competitiveness4) Diversification5) Engineering & Technology

BHEL Capacity Enhancement Program:

Timely, Planned & Scalable to meet MarketDemand

Manufacturing Capacity Expansion

Acquired BHPVVizag as 100% subsidiary in 2008. Slated to enhance our capabilities in design,

fabrication, supply and erection of custom built process plant equipments.

BHEL Electrical Machines Ltd. (JVC between BHEL & KEL (Kasargod)/ GoK) for

manufacturing of products for Railways and Industries. Strategic move to enhance our presence in

Transportation, Industrial and Renewable Energy Sectors.


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Strategic Focus & Execution Drive:

Positioned to Sustain Competitive Edge

Bridging skill deficit

Skill enhancement at ITIs in JV/PPP mode: Kabiguru (WB), Latur (Mah), Leveraging WRI Trichy to train high pressure welders Extensive training to Act Apprentices & Customers Lateral/ Campus/ Special/ FTA Recruitment Retired Specialists as Consultants, Re-Employment

Site capability enhancement

Greater empowerment of Project Managers Deploying additional Tools & Plants like heavy cranes suitable for erection of sets up to 800 MW. 18 Cranes added in 2010-11 Total Cranes as on March 2011: 126 Several process improvements to reduce PI to PO conversion time


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Positioning ourselves for Steady Profitable Growth:

Product Cost Competitiveness Strategies

Material Cost Reduction Efforts

Vendor Base Expansion: To reduce Risk & Cost Global Sourcing: Leveraging low cost China Manufacturing for high value forgings Indigenization: Efforts on to form JV with domestic steel manufacturers for indigenization of

critical steel materials like CRGO

Integrated Operations Improvement:Lean, DTC, PSM, ERP/SAP

Our Diversification Strategies:

Expanding our Offerings in New Growth Areas

Solar:Strategic Alliance with BEL for formation of JV for setting up manufacturing facility (250 MW) for silicon

wafers, solar cells & modules.

Joint Working Arrangement with Abengoa Spain for Concentrated Solar Power Plant (CSP).

Nuclear:

Steam generators for new rating 700 MWe Nuclear sets.

MoU with GE-Hitachi for cooperation in Nuclear island equipment for Power plants to be set up by NPCIL

Transportation:MoUs with Alstom and GE for participating in the tender for setting up a factory for Electric Lococomponents at Dankuni, West Bengal and Diesel Loco factory at Marhowra, Bihar respectively.

T & D

Strategic Alliance with Toshiba, Japan to establish a JVC to address T&D business in India and other

mutually agreed countries. The JVC will

cover equipments and projects in EHVAC & UHVAC range including 765

kV transformers and reactors & GIS, in addition to other products and systems.


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Water

Manufacturing Associate Agreement with GE India Industrial Private Limited (GEIIPL), for Water

Treatment Equipment.

BHEL will be able to provide more cost-effective membrane-based water treatment systems for power

plants and industrial sector for all type of input water like sea water, brackish water and waste water.

NBFC: Total Solution provider in power generation.

To finance power projects by providing funding support to attractpotential customers & optimize returns on

our huge cash reserves.May also expand to other segments like Renewable where funding support is

critical.


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BHEL making its Supply Chain Agile toAccelerate Project Execution

Vendor Base Expansion

1141 new Vendors added in 2010-11 & Vendor base reaches 25,347. Developing BoP vendors: 40 (2008-09) + 84 (2009-10) + 42 (2010-11) Procurement Office opened in Shanghai, China

AMA

Advanced Manufacturing Action for long lead items

TCA

Technology Collaboration Agreement with Sheffield Forgemasters UK for large size forgings(up to1000 MW)

Information Technology

e-Procurement , Reverse Auction

RateContracts

Long term Rate Contracts for Steel, Copper, CRGO, Transformer Oil(Contribution to total purchase ~25%)

Outsourcing

Enhanced thrust is being given for outsourcing of low tech/ non-core manufacturing.


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BHEL Performance

bhel tp work

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