BHEL fails to meet strategic plan targets: CAG

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New Delhi, Aug 8 (IANS) Bharat Heavy Electricals Limited (BHEL) which had fixed strategic plan targets for the period 2012-17 could not achieve any of them till 2015-16, the Comptroller and Auditor General (CAG) of India said on Tuesday.

“BHEL had fixed Strategic Plan targets for the period 2012-17 with focus on diversification and innovation. However, BHEL did not set year wise milestones for implementation of the envisaged strategies,” the CAG said in a report tanled in Parliament.

“BHEL could not achieve any of the strategic plan targets till 2015-16 and shortfall ranged between 23.33 and 113.91 per cent against specific goals.”

The engineering and manufacturing major had not effectively diversified into new or less operated business areas, both turnover and profitability declined sharply with slowdown in power sector, the report said.

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According to the report power sector continued to account for the bulk (76.46 to 80.83 per cent) of its turnover during 2011-12 to 2015-16.

Its turnover, which was Rs 49,510 crore in 2011-12 declined to Rs 26,587 crore in 2015-16, while a profit of Rs 7,400 crore in 2011-12 turned into a loss of Rs 913 crore in 2015-16.

The state-run company could not bridge the technology gap in the core power sector, in particular, circulating fluidised bed combustion, gas turbines, dry type transformers and 500 MVA inter connecting transformers, a statement said.

The report also pointed out that rationalisation of manpower according to level of operation was essential to maintain margin, competitiveness and business growth as manpower constituted significant component of company’s expenses.

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“Despite slowdown in power sector since 2010-11 and dampening investment sentiments, the company inducted 9,346 employees in the calendar years 2011 and 2012 against retirement of 5,844 employees during this period. As a result, the percentage of employee cost to turnover increased consistently from 11.04 per cent in 2011-12 to 20.84 per cent in 2015-16,” it said.

There was no improvement in the performance of the company in project erection as per customer surveys carried out over the period 2012 to 2014.

The report suggested that it needs to develop its own products that excel over competitors through R&D initiatives.

“Action plans need to be developed and implemented by BHEL within stipulated timeframe to address its weak areas vis-a-vis competitors as identified during customer surveys and as per reports of task forces constituted in this regard,” it added.

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