BHEL Bhopal expects rise in profits with new coal block policy

Coal block scam has not only affected the Bharat Heavy Electricals Limited (BHEL) Bhopal unit in the last two years, its profit margin has also reduced substantially.

But with the new coal block allocation policy, the situation could be stabilised in the coming years, said its executive director AMV Yugandhar.

Yugandhar told HT, “After coal block scam disclosure, the recession set in the power sector. BHEL’s Bhopal unit, which manufactured equipment for thermal power station, is facing a tough time. After the formation of the new government, we are optimistic towards an increase in profit in the next two-three years as the process of allocation of coal has been regularised by the government. The process has also started and it would improve the condition of the power sector.”

He said with the Foreign Direct Investment (FDI) cap increased to 49% from 25% in the defence sector, there are more opportunities of foreign inflows in BHEL.

Yugandhar said, “The Central government has raised the FDI cap in defence. We also want to manufacture equipment for the sector. It’s a good opportunity for BHEL to enter the defence sector by collaborating with foreign companies.”

The entry of Japanese and Chinese companies in the market has also raised concern for BHEL.

With rise in competition in the market, BHEL has brought about several changes in the services while dealing with an adverse situation.

"Quality-wise, BHEL products lead the market but at the same time BHEL units are also working on timely delivery and cost effective equipment," Yugandhar said.