Bharat Heavy Electrical Limited (BHEL) on Monday announced a record 40 per cent rise in net profit at Rs.6,021 crore in 2010-11 against Rs. 4,311 crore previously.
Attributing the rise in net profit to work efficiency, technological cost benefits and accounting policy changes, BHEL Chairman and Managing Director B. Prasada Rao said: “We had another successful year. The company has taken a number of initiatives. Localisation of technologies, continuous working on supply-chain and lower material costs helped us in getting good profit.'' Revenues went up by 27 per cent to Rs.43,451 crore in 2010-11 from Rs.34,154 crore in 2009-10.
Mr. Rao said the company was looking at business opportunities in the gas turbine segment in Japan. “We are exploring opportunities in Japan with our joint venture partner GE for setting up gas turbine projects, as they have a smaller gestation period or they can be set up quickly,'' he said. BHEL has earmarked Rs. 1,700 crore for capital expenditure in the current financial year.
BHEL made a foray into the Yemenese and Kenyan markets last fiscal, mainly for supply of motors apart from entering the solar power markets in Hong Kong and Turkey.
Mr. Rao said the change in the company's accounting policy on provision for warranty obligation for construction contracts also pushed revenues and profits higher. “The change in the accounting policy resulted in an increase in turnover by Rs.2,456 crore and before tax by Rs. 414 crore,'' he said.
Asked about the unrest in the Middle East and its impact on the business for the company in the region, Mr. Rao said most projects in the region were in final stages of implementation. “As far as new projects are concerned, there may be some delay as the present uncertain atmosphere can prevent new activity. But we look forward to doing aggressive business in the Arab world,'' he added.
On the order book front, BHEL secured orders worth Rs.60,507 crore in 2010-11 and expects a similar order book in the current fiscal. “We anticipate good order book despite many power projects getting delayed due to delay in coal block allotments,'' he noted. In the power sector, the company bagged orders to the tune of Rs.46,393 crore in 2010-11, including those from NTPC, Bajaj Hindustan, Jaiprakash Power Ventures and Raichur Power Company.
He said BHEL was discussing joint ventures in Orissa, West Bengal and Tripura. The company is focusing on its transportation business and is participating in tenders for setting up a factory for electric loco components in West Bengal and a diesel loco unit in Bihar.
