SWOT (Strength, Weaknesses, Opportunities and Threats) analysis of BHEL:

Strengths:
 Sound engineering base and ability to assimilate
 Relatively stable industrial relationship
 Access to contemporary technologies with the support from renowned collaborators.
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 Ability to set up power plants on turnkey basis, complete know- how for manufacture of
entire equipment is available with the company.
 Ability to manufacture or procure to supply spares.
 Fully equipped to take capital maintenance and servicing of the power plants.
 Largest source of domestic business leading to major presence and influence in the
market.
 Ability to successfully overhaul and renovate power stations equipment of different
international companies.
 Low labour cost.
 For non- BHEL products, services and spares are not easily available and if they are,
price charged are very high.
 Sound financial position in terms of profitability and solvency.
 Low debt equity ratio (even lower than 0.5:1) for all the years under study, enabling
company to raise capital.
Weaknesses:
 Difficulty in keeping up the commitments on the product delivery and desired sequence
of supplies.
 Larger delivery cycles in comparison with international suppliers of similar equipment.
 Inability to provide supplier’s credit, soft loans and financing of power projects.
 Lack of effective marketing infrastructure.
 Due to poor financial position of state electricity boards, which are the major customers
of BHEL in India, liquidity position of BHEL is not satisfactory.
 Being a public sector company BHEL is suffering from sub optimality of control due to:
1. Displacement of social objectives by political objectives, which may lead to
redundant costs and also rising costs.
2. Direct political intervention in managerial decision over an arm length relationship
that would restrict government’s task of setting appropriate managerial incentive
structure.
3. Private goals that lead to budget growth and employment growth.
4. Internal inefficiencies in bureaucratic activity.
Opportunities:
 Demand for power and hence plant equipment is expected to grow.
 Private sector power plants to offer expanded market as utilities suffers resource crunch.
 Ageing power plants would give rise to more spares and services business.
 Life expansion program for old power stations.
 Export opportunities.
 Easy processing of joint ventures/ collaboration/import/ acquisition of new technology.
 Financial and operational autonomy for profit making public sector enterprises. To make
the public sector more efficient government has decided to grant enhanced autonomy and
delegation of powers to the profit making public sector enterprises.
Threats:
 Increased competition both national and international.
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 Multilateral agencies reluctant to lend to power sector because of poor financial
management of S.E.Bs
 More concessions to private sector and not to government owned utilities like NTPC or
S.E.Bs, so future power projects would be opened up in private sector.
 Level playing ground not available, foreign companies spending much more on business
promotion tactics.