7/31/2019 Swot Analysis of Bhel

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SWOT ANALYSIS OF BHEL, JHANSI

STRENGTHS

The company has 180 products under 30 major product groups that cater to the needsof the core sector like power, industry, transmission, transportation, defense,telecommunications and oil business.

BHEL's ability to acquire modern technology and make it suitable to Indian conditionshas been an exceptional strength of the company.

Strong relationship with NTPC is strength as NTPC is planning a capacity expansion of Rs.52bn and based on the past, 85% of NTPC projects have been bagged by BHEL. The

company also enjoys purchase price preference.

WEAKNESSES

PSU status is a big weakness for BHEL as it is subject to their rules and regulations and isforced to carry a huge amount of labor force, which it is unable to retrench.

The company offers very stringent credit facilities to the customers and this is aweakness when compared in the face of rising competition. On the other hand their

customers in the power segment, SEBs, have a huge amount of receivables standing

against their name in the company's balance sheet. This is a major weakness of the

company.

The company is vertically integrated, which could have been avoided by outsourcing itscomponents for power generation and transmission. This could reduce the cost.

OPPORTUNITIES

The power sector reforms are expected to pick up in the near future in India, whichwould directly benefit BHEL.

Increase in defense budget will increase the top line for the company. NTPC is planning additional capacities to the tune of 2,800 MW, at a cost of Rs 52 bn.

BHEL could benefit a lot as it has happened in the past that significant portion of the

project of NTPC is handled by BHEL. Nearly 85% of the NTPC projects were assigned to

BHEL only.

The business of modernization and renovations of power plants is expected to grow inIndia.

The disinvestment plans of the government would bring in new resources andexperience into the company.

Joint venture with Siemens in the name of Power Plant Performance Improvement Ltd.(PPIL) is a major strength for the company. This tie-up will be beneficial as there is a lot

of scope for business.

7/31/2019 Swot Analysis of Bhel

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THREATS

The global trend of consolidation has already resulted in a fall in turnoverof the company and this will prove to be a major threat in the years to

come as well.

The company is dependent on NTPC to a great extent. Recently, the government has permitted the import of second hand capital

goods that are 10 years old without the need for a license. This move will

definitely increase competitive pressures for BHEL.