Bharat Heavy Electricals Ltd. : The Culprit Can Reign

As per many reports recently, India remains starved of electricity, as Bharat Heavy Electricals Ltd (BHEL), the sole power equipment manufacturing public sector unit in India couldn’t supply the plant machinery. So only 21,000 MW generation capacity was achieved as against the target of 41,000 MW in tenth Five Year Plan period. The planning commission lists as many as 20 projects including four hydropower projects that slipped due to constraints on BHEL’s side. Of the thermal projects, some major ones include Sipat-II (1,000 MW) and Kahalgaon I&II (1,500 MW each).

And how does it affect the national GDP? . In 2004-05, the Economic Survey of India estimated that power shortages cost the country a GDP loss of Rs 3,00,000 crore in just that year.

NTPC has decided not to partner with BHEL after it lost out to Lanco in the bid for the Sasan project in Madhya Pradesh. NTPC blamed it on the higher engineering, procurement and construction costs quoted by BHEL that was Rs5 crore per MW against when it wouldn’t have been more than Rs3.6 crore. The NTPC-BHEL bid was for Rs2.12 per unit of power generated, compared with Lanco-Globeleq Singapore’s Rs1.19.

Even the present power minister claims that. However, I don’t understand why the government couldn’t have taken a corrective measure during the last fifteen years when it had been happening.
The Eleventh Plan requires 15,700 MW to be added every year during 2007-2012. But BHEL can currently supply equipment only for 6,000 MW a year. For a long time BHEL didn’t didn’t add to its capacity. Though it is doing now, the capacity expansion takes time. By 2011, BHEL will have a capacity of 15,000 MW.

Further, the government has decided to shift to supercritical boilers for the new power plants, which produce electricity more efficiently, for 33,000 MW. BHEL has recently signed deals with France’s Alstom and Germany’s Siemens to acquire supercritical boiler technology. But naturally BHEL will have to assimilate and master the technology besides setting up the additional facilities. Naturally, it means missing of the eleventh plan target too.

I am of opinion that BHEL can speed up its expansion processes with a change in manufacturing strategy and better supply chain management. It must use the ‘Theory of constraints’.

 It starts with the mindset of the chief executive and its core team and the government that are to work together to attain the unachievable target.

 Let BHEL openly come out with its bottlenecks in manufacturing. It must be few components and few manufacturing operations that must be the bottlenecks. It must go all out for outsourcing all the components that it can get without compromising quality from the local manufacturers. If it fails to find local source, it can go for even importing the components, again without sacrificing the quality.

 All the public and private sector units such as HEC, Defense manufacturing units, HMT’s facilities, Bharat Pump and Compressors and many others in the country can be part of the process.

 BHEL must put its best talent to speed up the bottleneck operations, as many a times the potentials of the equipment remain underutilized as it was not needed.

 It must invest immediately in procuring the machine tools required for the bottleneck manufacturing operations.

 Bottlenecks are resolved by cutting down on the cycle time (the time between the start and the end of the operation). Many times, it may mean increasing the cutting parameters that are normally kept low to be too much on the safer side, or by adding some roughing operation on a different machine. Sometimes, it can come from dimensionally controlled castings or forgings or an extra operation at the vendors’ end. BHEL has a huge resource of talent that can resolve amicably its bottleneck. But if necessary, let BHEL be given the autonomy to employ the best consultants from inside the country or by going offshore that can solve manufacturing bottlenecks.

 Let BHEL also engage the best brains of IITs and institutions such Mechanical Engineering Research Institute and other such facilities.

With all my experiences in manufacturing over all these years, though in automotive sector, I can assure that it is possible for BHEL to build a capacity of 20,000 MW a year or more in next two years. And if that is the challenge placed before its technocrats, why should they not find a solution?