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Bharat Heavy Electricals Ltd.Environment & Strategy Overview

JM Financial India Conference

Mumbai

12thNov 2013

at


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Environment & Strategy Overview

Our Credentials

A US$ 9 billion Engineering & Manufacturing

enterprise of its kind in India A Maharatna company and a Major Integrated

Power Plant Equipment Manufacturer in the

World

Profit Making Company since 1971-72 Consistent Dividend Paying Company for over

thirty years (FY 1976-77 onwards)

References in over 75 countries

Installed base of more than 1,30,000 MW

17 Manufacturing Units + 1 Subsidiaries + 6 JVs +

Infrastructure to deal with 150+project sites

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We are Single Source with Multiple Solutions for

Infrastructure & Industrial Sectors.

Power Industry Oil & Gas

Transmission Transportation Renewable

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We are Indian CPSE with GOIs holding of 67.72%.

( As on 30th

Sept 2013)

President of

India

67.72%

FIIs

15.25%

MFs, FI, Banks

4.94%

Insurance Cos.

7.01%

Bodies Corp

1.25%

Individuals

3.39%

Others

0.44%

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Despite challenging economic environment, we have

registered good growth .

21,401

28,03334,154

43,337

49,510 50,156

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Turnover (Rs Crore)

21% CAGR

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Despite challenging economic environment, we have

registered good growth .

2,859 3,1384,311

6,011

7,0406,615

15% 12% 13% 15% 15% 14%

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Net Profit (Rs Crore) Profit Margin

Profitability

24% CAGR

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7/28Environment & Strategy Overview

While maintaining leadership in Indian market

Order Inflows (Rs Crore)

50,270

59,678 59,037 60,507

22,096

31,65048%

63%

45%

61%

33%

67%

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Order Inflows PS Market Share

Total Order Book as on 30.09.13: Rs 1,02,380 crore

* Due to bulk tender where distribution was pre-decided

*

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Resulting in enhanced performance in project

execution

7,150

4,182

5,578

7,666

9,27010,340

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Commissioning/ Synchronization (MW)

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Performance H1 FY2013-14

Rs Crore Up to Sept 2013 Up to Sept 2012 % Change

Turnover 15,987 19,750 19%

Net Profit 921 2,195 58%

Order received 4,470 8,717 ---

Orders book total 1,02,380 1,22,300 ---

Projects Comm/Sync (MW)

4,764 3,505 ---

9

Rs Crore



Today, BHEL is facing challenges from several fronts.

Uncertainties in

Global economy

Transportation of

Heavy & ODCconsignments

RisingCompetition

Disturbances in

target export

markets

Indian Power Sector

in stagnation

Critical Raw

Materials, BoP

Vendors, Skill deficit

Slowing IndianEconomy

Slackness in large

Infrastructure

Projects

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But, there are huge market opportunities. India can

not grow more than 8% without focus on power sector.

147

220

306

425

575

778

735

1097

1524

2118

2886

3880

2008-09 2011-12 2016-17 2021-22 2026-27 2031-32

Generation

Capacity (GW)

Electricity

Generation (bln KWh)

State of Indian Power Sector

Generation Capacity 226 GW

(59% Coal)

Per capita consumption

of electricity

879.22 kWh

Less than 1/3 of

world average

AT&C Losses 26.15%

Demand- Supply deficit 8-9%

Peak demand-supply

deficit

13-14%

Avg cost of electricity 378 paisa/ unit

Realization 301 paisa/ unit

(80%)

Integrated Energy Policy 2006, Planning Commission

@ 8% GDP growth

Source: CEA Monthly Report June 2013

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Practically every 2 houses out of 3 in India are supplied power generated from BHEL sets

Installed capacity- Utility*

2,01,036 MW (31.03.13)

Generation- Utility**

838 bn Units (2012-13)

BHEL

66% Others34%

BHEL

57%

Others43%

and we are placed well to harness these

opportunities

*Coal, Gas & CCP, Diesel, Nuclear & Hydro

** Coal, Nuclear & Hydro

500 MW thermal sets - consistent availability of more than 90% for the last six years. 170 coal based sets achieved OA higher than 90%.

167 BHEL supplied coal based sets clocked uninterrupted operation of more than 90 days during the

year out of wh ich, 53 sets ran twice continuously for more than 90 days and 29 sets ran continuously

for more than 200 days.

Trombay 5 (500 MW) and Singrauli 5 (200 MW) clocked uninterrupted operation throughout the year.

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BHEL supplied power plant equipment exhibit world

class performance.

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* Average performance of thermal sets during 2007-2011; Source: North American Electric Reliability Council (NERC); 2013

84.73%

68.98%

10.41%4.89%

86.80%85.78%

6.56%6.64%

OperatingAvailability

(OA)

Plant LoadFactor (PLF) PlannedMaintenance ForcedOutages

due to Equip.

85.73%

62.80%

9.74%4.51%

88.97%

80.16%

6.15% 4.89%

OperatingAvailability

(OA)

Plant LoadFactor (PLF)

PlannedMaintenance

ForcedOutages

due to Equip.

Performance of 400-599 MW Sets* Performance of 200-299 MW Sets*

NERC member countries (North America, Canada, Europe part) BHEL Sets



Recent study* by CEA testifies our performance.

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Specific Fuel Consumption

(ml/kWh)

Operating Load Factor

(OLF)

Total Outages

Design Turbine Cycle Heat

Rate (THR) of 300 MW sets(kcal/kWh)

Design Turbine Cycle Heat

Rate (THR) of 600 MW sets(kcal/kWh)

1910

1893

1954

1922

2719

2527

Operating Heat Rate (OHR)

(kcal/kWh)

Study covers 12480 MW (36 units) BHEL sets and 8220

MW (22 units) Chinese sets

THR and OHR are on like to like basis (BHEL sets of 250

MW and 500 MW while Chinese sets of 300 MW and 600

MW). Also Chinese power plants uses feed heating fromHigh Pressure Turbine while BHEL does not.

OLF and Total Outages percentages are of those plants

which uses Indian Coal only and excludes plants who

remained shut for very long time during study.

SFC comparison is of those plants which uses Indian

Coal.

* Analysis of Chinese equipment vis--vis Indian(BHEL) Equipment, Central Electricity Authority, New Delhi India, May 2013

BHEL Equipment Chinese Equipment

71.6%

57.2%

3.06

6.13

18.7%

23.5%



As a result, we are market leader in Indian Power

Sector.

Chinese

Comp,

18496,

34%

Other

ForeignComp,

8227, 15%

BHEL,

25385,

46%

Other

Indian

Comp,

2856, 5%

XI Plan 2007-12 (54,964 MW)* XII Plan 2012-17 (1,42,603 MW)

Chinese

Comp,

42155,

30%

Other

Foreign

Comp,10670, 7%

BHEL,

66067,46%

Other

Indian

Comp,

23711,

17%

*Actual Achievement

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Our Industry Sector Business: diverse, slated to grow

Transmission

7-9%

Transportation

3-5%

Captive Power

Plants & other

Industrial Products

12-15%

Transmission

Transformers

Switchgear

Indl. Control Gear / Control Panels

Capacitors

Insulators

HVDC/ Transmission Projects etc

Transportation

Traction machines

Traction Control gears

IGBT Propulsion system

DESL, AC Locos / DG Sets / etc

Captive Power Plants & other Industrial

Products

CPP - Indl. TG / Boiler Sets

Industrial Machines Compressors

Oil Field Equipment, Valves etc

FY 2012-13

FY 2011-12

FY 2010-11

Contribution to total Turnover: 22-28%

Renewable & others

Solar

Water

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We are focusing on 6-Point Agenda to meet Strategic

Plan 2017 targets.

1

2

3

4

5

Engineering

&

Technology

6 Timely investments

-Planned & scalable

Inorganic Growth

Supply Chain Agility

Skill Enhancement

Effective Site

Management &

Information Systems

Operations Improvement

Lean, DTC, PSM

Global Sourcing, Indigenization

Upgrade Product Range in

Thermal, Gas & Hydro

Generation

Nuclear Power, Transmission,

Transportation, Renewable

Energy, Water

Investment in R&D

Absorption of Supercritical

Technology

Fast-track Technology &

Product Development for

IGCC, 765/ 1200 kV

Transmission ,etc.

Performance & Potential alignment of new

inductees with Companys Challenges

Leadership Development

Technical/ Functional Competency

Development

Engineering

&

Technology

Capability

Enhancement

Accelerated

Project

Execution

Diversification

BHEL

Product

CostCompetitiveness

& Quality

People

Development

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Innovation is our key focus area to steer future

growth.

175213

263 303351

385

FY08 FY09 FY10 FY11 FY12 FY13

Filing of Patents & Copy Rights (Nos.)

463

690

829

982

1199

1248

FY08

FY09

FY10

FY11

FY12

FY13

R&D Expenditure (Rs Cr)

2719

55706723

78099832 9643

FY08 FY09 FY10 FY11 FY12 FY13

Turnover from in-house

developed products (Rs Cr)

2.5%

~20%

2170

Today our R&D focus is globally recognized (CII-Thompson Reuters Innovation Award 2010)

Forbes ranks BHEL at No.9 in list of World's 100 Most Innovative Companies(July 2011)

145 Mission & Technology Planswith over 1500 R&D projects identified for establishing self sufficiency in the

areas of UHV Transmission, Transportation, Ultra Super Critical Plants, Renewable energy, IGCC, Water etc.

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We are developing strong capabilities in Product

Development & Engineering.

270/300/525/600/700 MW sub-critical sets

introduced

Advance Class Gas Turbines tech in place

765 & 1200 KV UHVAC Transformer, Reactor

developed

IGCC development

Transportation-IGBT technology developed

for Loco & ACEMU

Sole supplier in world for 420 kN/320 kN

porcelain insulators for 800 kV HVDC lines

Products Development Supercritical Technology with Technology tie-ups

with Alstom (Boiler), Siemens (TG) & MHI (Pumps)

Rapid technology absorption in partnerships with

customers

Supercritical Orders basket 24 TGs and 27 SGs:

2X660 MW NTPC Barh (SG & TG) 3X660 MW Prayagraj PGCL, Bara (SG & TG)

2X800 MW APPDCL Krishnapatnam (SG)

2X800 MW RPCL Yermarus (BTG)

1X800 MW RPCL Edlapur (BTG)

1X700 MW KPCL Bellary (EPC)

2x660 MW NTPC Mauda (SG & TG)

3x660 MW Bajaj Hindustan, Lalitpur (BTG) 2x660 MW DVC, Raghunathpur (TG)

2x660 MW DB Power, Singrauli (BTG)

3x660 MW NTPC Nabinagar(SG)

2x660 MW OPGC, IB Valley, Banharpalli (BTG)

2x660 MW RRVUNL Suratgarh (EPC)

2X800 MW NTPC Gadarwara (TG)

Supercritical Domain

We are slated to play a key role in RDD&D in

India's first coal fired Advanced UltraSupercritical (AUSC) power plant in

association with Indira Gandhi Centre for

Atomic Research (IGCAR) and NTPC.

AUSC: 5% more efficiency; 12% savings in

coal; Less GHG emissions

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Our scale is another competitive advantage.

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

fabrication, supply and erection of custom built process plant equipments. Turnaround in 2010-11.

Merged with BHEL in Aug 2013 wef Oct 2011.

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.

15000

MW

20000

MW

March 2010 March 2012

Inorganic Growth

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New manufacturing plant operationalized:

Power Plant Piping Unit, Thirumayam

High Pressure Boiler Plant - Unit II, Trichy

Setting up the greenfield Power Equipment

Fabrication Plant at Bhandara, Maharashtra

Manufacturing Capacity Expansion New Manufacturing Plants


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Various initiatives are being taken to enhance pace of

execution.

Skill enhancement at ITIs in JV/PPP mode: Kabiguru (WB), Latur (Mah), Bajpur (UP),

Peramvalur (TN), Khandwa & Khaknar (MP), Haridwar (Uttranchal)

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

Bridging Skill Deficit

Central monitoring system for PG test: 58 PG test (TG, SG & ESP) during 2012-13

Deploying additional Tools & Plants like heavy cranes suitable for erection of sets up to 800 MW.

Cranes available in PS (>=75 MT): 129 nos

Strand Jacks: 2 nos

Induction Heating Machines in PS: 294 nos

Site Capability Enhancement

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Various initiatives are being taken to enhance pace of

execution.

Vendor Base

Expansion

~1900 new Vendors added in 2012-13 & Vendor base >20,000

Developing BoP vendors: 40 (2008-09) + 84 (2009-10) + 42 (2010-11)

Procurement Office established in Shanghai, China

AMA Advanced Manufacturing Action for long lead items

TCA Technology Collaboration Agreement with Sheffield Forgemasters UK forlarge size forgings (up to 1000 MW)

Technology Collaboration Agreement with MHI Japan for FGD

IT e-Procurement , Reverse Auction (~36%)

Rate

Contracts

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

ACF Away Center Fabrication adopted by Trichy & Ranipet Units

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Our Diversification Strategies:

Expanding our Offerings in New Growth Areas

Highest rating SPV Power Plant orders of 10

MW each from NTPC for Unchahar and

Talcher.

Commissioned 5 MW grid-connected Solar

Photo Voltaic (SPV) Plant for KPCL at Mandya,

Karnataka

MoU signed with Govt. of Maharashtra to

consider the possibility of setting up an

integrated facility for the manufacturing of

Solar Photo Voltaic systems.

Joint Working Arrangement with Abengoa

Spain for Concentrated Solar Power Plant(CSP)

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MoU signed with Indian Railways for setting up a greenfield coach factory for Mainline Electric Multiple Unit

(MEMU).

Participation with global majors in the tender for setting

up a factory for Electric Loco factory at Madhepura and

Diesel Loco factory at Marhowra respectively.

Catering to RDSO's requirement for conversion ofexisting DC EMUs to 25 kV AC EMUs, BHEL has

successfully type tested a 1200 kVA AC EMU transformer

which matches the dimensions of the conventional AC

EMU transformer with a 20% enhanced output.

Orders for State-of-the-art propulsion equipment for

6000 HP Electric Locomotives and 1400 HP AC EMUs

(IGBT based) under execution

Executing an order for 200 numbers of 5,000 HP 25 kV

AC Mainline Electric Locomotives (Type WAG -7) for

Indian Railways.

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Manufacturing Associate Agreement with GE India Industrial PrivateLimited (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.

765 kV Transformers & Reactors ordersreceived from Megha

Engineering and Infrastructure Ltd. for Western UP Transmission

System upgradation, and BIDCO for the upcoming 3x660 MW Lalitpur

TPS.

To improve the stability and reliability of power systems, BHEL has

developed and manufactured a 3-Phase, 315 MVA, 400 kV class, Phase

Shifting Transformer with state-of-the-art features. It will be installed

at APGENCO Kothagudem.

Indias first and highest rating indigenously developed 1200 kV

class Transformer successfully test charged to cater to 1200 kVUHVAC Transmission Systems

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Steam generators for new rating 700 MWe

Nuclear sets

Tripartite JV with NPCIL & Alstom in process for

conventional island of Nuclear Projects for 700

MWe & above

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

NPCIL

Order secured from NPCIL for TG package for

2x700MWe for RAPP 7&8

Order for supply & Installation of Control and

Instrumentation for Turbine Island SecondaryCycle System for 2x700 MW Kakrapar project in

Gujarat.

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Five years after the global financial crisis, the

economy and the industry are still reeling under the

crisis of confidence in India as well as in the world. We

too are affected by this crisis but we are not allowing

the crisis go waste. Your company is building new

competitive advantages by experimenting new ideas

and methods rapidly, frequently, and economically

not only with products and services but also with

business models, processes, and strategies. While wemay have to go through some pains in short term, I

have absolutely no doubt that your companys inherent

technology strength, highly committed manpower,

manufacturing prowess and innovation ecosystem will

enable us to recapture the growth once Indian

economy moves to another growth trajectory in near

future.B Prasada Rao

Chairman & Managing Director

49thAGM, Sept 20, 2013

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6 111113

Thank you!

Powering Progress

Brightening Lives

Cautionary Statement: Statements in this presentation describing the companys objectives, estimates, expectations or predictions may be

forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those

expressed or implied. Important factors that could make a difference to the companys operations include global and Indian demand supply

conditions, finished goods prices, cyclical demand and pricing in the companys principal markets, changes in government regulations, tax regimes,

economic developments within India and the countries within which the company conducts business and other factors such as litigation and labour

negotiations. The company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any

subsequent development, information or events, or otherwise.

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