'BHEL's inability to innovate led to losses'

A report by CAG tabled in Parliament on Tuesday rapped public sector Bharat Heavy Electricals for not completing any of its projects within scheduled time and said its lack of efforts to innovate strategies led to heavy losses.

Power sector continued to account for the bulk of (around 76% to 80%) of BHEL’s turnover during 2011-12 to 2015-16. As BHEL had not effectively diversified into new/less operated business areas, both turnover and profitability declined sharply with slowdown in power sector.
BHEL’s turnover, which was Rs 49,510 crore in 2011-12 declined to Rs 26,587 crore in 2015-16; while profits of Rs7,400 crore in 2011-12 turned into a loss of Rs 913 crore in 2015-16.

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. It could not achieve any of the strategic plan targets till 2015-16 and shortfall ranged between 23.33% and 113.91% against specific goals. The report said though BHEL had quoted below production cost in 13 cases, 11 of them were being executed with profit margins.