BHEL unit eyes acquisitions

The Tiruchi unit of Bharat Heavy Electricals Ltd (BHEL) is considering four-five companies as candidates for acquisitions, its executive director, A V Krishnan, told Business Standard.

"We are looking at investing Rs 250-400 crore (Rs 2.5-4 billion) for the acquisition. This will give us more good machinery, logistics and, importantly, land," he said.

The units in question are public sector ones, he indicated. Last year, the unit acquired Bharat Heavy Plates and Vessels Ltd (BHPV) in Visakhapatnam, another public sector unit. "We are looking at a 100 per cent take over and once it is acquired, it will become a subsidiary of BHEL," he said.

On expansion, Krishnan said the unit is planning to invest Rs 740 crore (Rs 7.4 billion) up to 2012. This includes Rs 300 crore (Rs 3 billion) in the new project at Tirumayam, near Tiruchi, expected to go on stream by 2012.

By March 31, 2010, the unit is expected to reach a 650,000-tonne capacity and will touch Rs 10,000 crore (Rs 100 billion) turnover. "We are also planning to give orders to import three machines worth Rs 400 crore (Rs 4 billion) by March 2010."

The unit has around 450 vendors in Tiruchi and recently added 52 vendors across Madhya Pradesh, Kanpur, Pune, Nagpur, Kolkata, Durgapur and Raigarh.

"Between April and November, we have given works worth Rs 450 crore (Rs 4.5 billion) or orders worth 300,000 tonnes. This will be increased to 450,000 tonnes worth Rs 1,000 crore and then to 600,000 tonnes in 2011-12."

The capacity, of these vendors will not be enough to address BHEL Tiruchi's requirements. "I have asked them (vendors) to adopt a cluster approach, whereby two or threes come together and join hands to supply BHEL". 

Krishnan wants 30 per cent of BHEL-Tiruchi sub-contractors to have 500-tonne-plus capacity. Currently only three do, while the others are having only 60-70 tonne capacity.

The other area which the unit is bullish about is nuclear power, said Krishnan. In five years, annual manufacturing capacity of atomic power equipment will be increased to 1,000 Mw from 700 Mw in this segment.