Power equipment manufacture being both capital and skill intensive, has enjoyed a high degree of protection.USA, with its vast market allowed limited imports. India is the only country, with an indigenous manufacturing facility, which allowes import of power generation equipment. There is enough documentary evidence of cartelisation amongst power equipment MNCs. In fact there is case law regarding litigation against MNCs under the U.S. Anti Trust laws.
In the global market power equipment manufacturers are the very large and powerful MNCs. They have political and financial support not only of their home Governments but also of large financial agglomerates and the World Bank. MNCs get an extensive subsidy from their home Governments in the form of defence contracts.
BHEL is unique in many respects. It is the only manufacturing unit, one of its kind, in the entire Third World. The objective and purpose of setting up BHEL was to enable India to be self sufficient in electrical equipment manufacture. Its size and product mix were designed to serve this objective. It has almost the entire range of equipment in power generation, transmission, distribution and utilisation. It is involved in electric traction and oil field equipment and marginally in telecommunication equipment. Recently it has started getting involved in Defence equipment. BHEL has no consumer products. Inspite of the fact that BHEL was a late starter and in a Third World country, it has managed to remain technologically contemporary. Some of its significant achievements are:
* Almost three quarters of all the thermal power plants and more than
half the hydro power plants installed in India have been built by
BHEL.
* Almost 90 % of the thermal power plants awarded for meritorious performance
are equipped by BHEL
* BHEL had a success rate of 90 % in international competitive
bidding held in India since 1977.
Such achievements by a Third World enterprise are not acceptable
to the recession hit MNCs and their patrons in India. In response to the
recession in the power equipment industry in the late seventies one
of the MNCs tried to capture BHEL via a broad based umbrella technical
collaboration (the now famous BHEL-SIEMENS collaboration). When this attempt
failed, the MNCs influenced the Rajyadaksha Committee, set up in 1982 to
study the power industry, to recommend that, "in the Indian milieu BHEL
is too big and any further expansion would make it unwieldy and sluggish...
there is a case today for setting up one or more facilities, either
in the public or private sector, to produce equipment which
is today BHEL’s exclusive preserve so that competition is fostered...in
order to derive the benefit of standardisation the foreign collaborator
could be the same as BHEL’s ". This at a time when companies in Europe
were merging and studies made by the London Trade Policy Research
Centre and the UN Centre for TNCs showed that for economic efficiency
of production it was necessary
to produce 12,500 MW per year for thermal power plants alone,
against which target BHEL’s own limited capacity of 3,500 MW per annum
was being under utilised. The Rajyadaskha Committee’s back up recommendation
was, "If there is a risk of equipment from BHEL being delayed, orders on
foreign suppliers should immediately be placed" On that understanding
an immediate import of equipment for 2000 MW , from BHEL’s collaborator,
was recommended ! These two arguments, of competition and likely
delays in delivery, have been constantly used, by the MNCs and their Indian
patrons, to brow beat BHEL.
In recent years, under the combined pressure of the World Bank/IMF, MNCs -their home Government and the lure of very large kick backs, the Government of India has radically altered the nation’s power policy from being consumer friendly to being investor (particularly, foreign investor) friendly. Therefore, all policy options are currently viewed only from an investor perspective. To ensure that there should be no dilution in this perspective, the World Bank has insisted that the Govt. of India take a $ 200 million loan to engage foreign (mostly U.S.) consultants to draw up blue prints for the implementation of the power policy. The market conditions for the power equipment industry and the radical changes in India’s power policy are very significant issues that need to be studied in order to understand the long term future of BHEL. This paper attempts to do that.
2.0 Power generation equipment market
A U.K. based market research group - ABS Energy & Power has estimated, on a MWs per annum basis, the average annual market, between 1995 and 2000, for power generation equipment (excluding transmission & distribution), for creating additional capacity and for replacement of aging plants. The following analysis has been made based on their data.
2.1 The Global market
The total annual global market for power generation equipment is estimated as 73,166 MW. The continent - wise break up and the principal markets within the continent are given in Table 1.
Table 1 - Structure of the Global market
| Continent | % of global market |
| Europe | 11 |
| Germany | 40 |
| U.K. | 10 |
| Former USSR and East Europe | 13 |
| Russia | 65 |
| Ukraine | 10 |
| Africa | 3.3 |
| Egypt, South Africa, Nigeria, Libya | 95 |
| Middle East and West Asia | 2.3 |
| Iran and Trukey | 50 |
| Asia and Australasia | 44 |
| China, S. Korea, Japan, India, Thailand, Indonesia, Malaysia | 95 |
| Latin America and the Caribbean | 4.4 |
| Cuba and Mexico | 45 |
| North America | 22 |
| USA | 80 |
| Canada | 20 |
Table 2 - Classification of countries and their share of the global market.
Countries with indigenous manufacturers and effective
market protection.
USA, U.K., Germany, Canada, )
44 %
Japan, Russia and Ukraine,
)
South Korea.
)
Countries with indigenous manufacturers and negative market protection.
India
5 %
Countries with no indigenous manufacturers
Indonesia, Malaysia,
)
11 %
Taiwan, Thailand, Australia )
China
18 %
The size of the Indian market is placed in comparison with the World market just to get a global perspective. The Indian market is almost one and half to double the size of the combined market of 14 Middle East and West Asian Countries put together; the combined markets of the eight Eastern European countries or the combined market of 13 Latin American nations; the combined market of 51 countries in Africa or larger than the entire market of Europe (excluding Germany and U.K.)
The Indian network is very well developed. It is capable of absorbing large size units as well as ‘state of art’ technologies. There are only eight countries in the world which in 1995 had an installed MW capacity comparable to India’s installed capacity of 88,025 MW. Details are given in Table 3. Additions to the Indian power network in different Plan periods are given in Table 4.
Table 3. Size of the electrical power network of select countries.
Country MW installed
USA
8,23,786
Russia
2,38,565
Japan
2,12,960
China
1,74,150
Germany
1,16,197
Canada
1,16,197
France
1,08,406
INDIA
88,025
Since power generation and T&D is capital intensive
and India is short of capital, the Indian power equipment market has always
been intermediated by the source of financing. For example, bilateral credit
implies import of equipment from the country providing credit, multilateral
credit implies international competitive bidding. Commercial credits from
countries like Germany clearly stipulate conditions for import of equipment
from Germany. Japanese credit through OECF is more discreet but ensures
a reasonable share for the Japanese industry
Table 4. Additions to the Indian power network in different Plan periods
Plan period Actual addition
in MW installed
1
2
First Plan (1951/52 - 55-56)
1100
Second Plan (1956/57 - 60/61)
2250
Third Plan (1961/62 - 65/66)
4520
Annual Plans (1966/76 - 68/69)
4120
Fourth Plan (1969/70 - 73/74)
4579
Fifth Plan (1974/75 - 78/79)
10224
Annual Plan (1979/80)
1799
Sixth Plan (1980/81 - 84/85)
14226
Seventh Plan (1985/86 - 89/90)
21402
Another form of intermediation is to influence the credit supplier (World Bank/ ADB etc.) to engineer the specifications in such a manner as to minimise competition. Often specifications are drawn up in such as a way that either BHEL would get eliminated from the bid or would be forced to enter into a collaboration with a MNC.
Therefore, inspite of there being such a large Indian market the capacity utilisation of BHEL is steadly going down as shown in Fig. 1 Juxtaposing, the data regarding the market one could conclude :
i) that MNCs are desperate for markets and that the Indian market for power equipment is very critical to them.
ii) that the MNCs would use all means, including corruption, to get the Indian market. It is pertinent to note that power sector is the king pin in the "Jain Hawala" scam. This was under conditions of international competitive bidding for purchase of equipment. It does not require much imagination to expect kick backs of a high order in the present state of liberalisation where projects are awarded on a negotiated basis on terms and conditions stipulated by the World Bank and MNCs. Electricity is the biggest commercial enterprise within the purview of the State Governments and power is a concurrent subject in the Constitution of India and that is perhaps why there is concurrent corruption and a conspiracy of silence amongst the various political parties.
iii) BHEL is almost entirely dependent upon the sale of power equipment in the domestic market. Disruption of this sale would be the death knell for BHEL.
4.0 Indian power policy since 1991.
4.1 Resource crunch or violation of law.
The ‘raison d’etre’ given for an unrestricted and unregulated opening of the Indian market for power generation equipment is that India has an acute resource crunch, therefore it is not possible to sustain development in the power sector. Closer scrutiny however indicates that the lack of financial resources is in fact caused by a violation of the law. Section 59 of the Indian Electricity (supply) Act stipulates that the concerned Governments would formulate policies and administer such tariffs to ensure that SEBs have a 3 % rate of return (ROR). Neither the Government of India nor the State Governments have bothered to enforce the law of the land. As a consequence, the present ROR of SEBs is (-) 13.5 % (average all India). Had there been an adherence to the law the additional annual resource mobilisation in 1995 would have been Rs. 8757 Crores. If politically protected theft of electricity is curbed, the estimated additional revenue mobilisation would be anywhere between Rs. 2000 to 3000 Crores. Thus the lack of resources of the order of more Rs.10,000 Crores per annum is due to a violation of the law. In other words, the resource crunch has been artificially created and the Indian power market has been opened to foreign investors and MNCs. The treachery and cynicism of Indian politicians and bureaucrats cannot be justified any longer.
As a matter of fact the SEBs have been robust almost till the eighties. They generated enough resources to meet the needs of the industry. During the mid seventies, the SEBs had an operating surplus equal to 24 percent of their revenue earnings. In 1974 - 75 average cost per Kwh was 16 paise against a sales realisation of 20.4 paise. By 1990-91 the average cost per Kwh was 105 paise and the sales realisation 81 paise. As a consequence the SEBs were incurring financial losses to the tune of 30 % of their earnings. As against an average rate of return (ROR) which was 9.5 % in March 1980, the average ROR in March 1995 was (-) 13.5 %. This was mainly due to two reasons. One, the compulsions of populist politics did not enable the administered price of electricity, particularly to the agricultural sector, to be increased. Two, there was an increase in capital costs. The devaluation in 1966 pushed the capital costs from Rs. 74 lakhs per MW to Rs. 79 lakhs per MW. The devaluation in 1991 pushed the capital costs by 54 % in 1993 -94. Just as the capital costs were stabilising, the market was opened up to international investors who escalated the capital costs in an exponential scale. Kindly refer to Fig 2.
4.2 The radical "reforms" in the power sector.
* An integrated power system is to be broken up into a chaotic labyrinth of private and public owned power plants. The private owned plants being "must run" plants with guaranteed 80 to 90 % PLF (against an average system peak to base ratio of 60 - 70 %) thereby implying that the public owned plants would back down during off peak hours irrespective of the relative cost of generation of the two systems. The principle of least cost incremental generation, which is practiced in all developed countries, would be reversed.
* While transmission is to be state owned, distribution is to be broken up into several organisations which would then be privatised. Issues like the uneven nature of development in various parts of the state as well as skewed income levels are completely glossed over. The experience of privatising the distribution network in NOIDA, U.P. was along expected lines. The private company not only defaulted in contract payments but in addition it did not pass on to UPSEB the payments collected from consumers, except as adhoc payments. Instead the entire contract was converted into a legal litigation. While the private party is obliged to pay UPSEB 14 % interest for default, UPSEB is borrowing at 19 %. Legal settlement would take a decade and meanwhile the private party could enjoy profits without making any investment, except on paper.
* The restructuring model does not discriminate between the various States inspite of different ground realities. For example, the model is the same for Maharashtra, Haryana or Orissa. In Maharashtra, MSEB generates 74 % of the total power consumption in the state, agriculture contributes 3.25 % of the revenue while consuming 23 % of the total sale of electricity. In Haryana, HSEB generates 65 % of the total power consumption in the state, agriculture contributes 20 % of the revenue while consuming 43.5 % of the total sale of electricity. In Orissa, 42 % of the total power consumption in the state is produced within the state, agriculture contributes 3.3 % of the revenue while consuming 8.8 % of the total sale of electricity.
* The fact that restructuring and other investor friendly policies would result in steep increases in tariffs is suppressed from the public in order to prevent any protest until the restructuring and privatisation is completed. The foreign consultants have recommended steep increase in tariffs for the presently subsided domestic and agriculture users and reduction in tariffs for industrial user. The policy of cross subsidisation of agriculture by industry is to be reversed. It is to be replaced with cross subsidisation of the high cost power produced by foreign investor power plants by the low cost power generation of the SEBs. For example, the consultants have recommended that in U.P. the domestic tariff which is at present at an average of Rs. 1.25/unit is sought to be increased by 1999/2000 to 5.04/unit (and Rs. 8.12/unit on "time of day basis") at 1994/95 prices and similarly in the case of agriculture the tariffs are to be increased from the present Rs. 0.78/unit to Rs. 3.45/unit (and Rs. 5.56/unit). It does not require a foreign consultant to state that if high cost power is introduced into U.P. where 56 % (21 % T&D losses + 35 % supply to the agricultural sector) of the power available (from self generation and purchase) earns only 12 % of the total revenue then the tariffs need to be steeply increased. It is obvious that while there would be no political will to increase tariffs to the domestic and agricultural sector, the "reforms" will be carried out with legally enforceable contracts with foreign investors. The result would be trading assets for debts. This has happened earlier in U.P. UPSEB transferred to NTPC, its Unchahar Power station in exchange for outstandings of NTPC. And so, as Robert Clive picked up principality after principality, foreign investors will pick up public owned power plants one after another.
* The fuel policy balance of the nation is sought to be distorted with increasing emphasis on power generation using imported fuels. Sane recommendations like that made by the Working Group on Power (N.B.Prasad Committee), "Hydro power would represent an annual bonus of nearly 250 million tonnes of coal" have been entirely forgotten.
* The SEBs today owe the Central Public Sector Undertakings (CPSUs) over Rs. 10,000 Crores (out of which about a fifth is the outstandings of BHEL). The Government of India is not concerned about this problem. Their concern is to provide sovereign guarantees to foreign investors that their dues would be paid as per the stipulations of the Power Purchase Agreement. Also under active consideration are proposals of opening escrow accounts for foreign investors. Considering the present state of financial health of the SEBs, Government guarantees, opening of escrow account would imply that SEBs dues to CPSUs would increase exponentialy. This would jeopardise not only the CPSUs but also SEBs own power generation since CPSUs provide the inputs.
5.0 Structure of the power equipment industry.
5.1 Response to conditions of market recession
As a result of the acute recession survival has become difficult for many power equipment manufacturers in Europe. As a consequence, equipment manufacturers had began to merge and consolidate. ASEA of Sweden and BBC of Switzerland merged to form ABB; GEC and Alcatel Alshom started operating in the power sector as GEC Alsthom. Siemens a European major diversified into telecommunication, medical equipment etc. instead of following the merger route. The response of US companies has been to diversify. GE diversified into various other activities including investment finance. Westinghouse diversified into broadcasting, electronics etc. Japanese companies like Hitachi, Mitusubushi, Mitsubushi Heavy Industries (MHI) are very large agglomerates which are involved in many activities, power equipment being one of their product lines. Besides these majors, there is an Italian Public Sector Undertaking - Ansaldo, and several smaller players like John Brown, AEG, Sumitomo, Marubeni, Fuji Electric, Rolls Royce, Parsons, etc.
5.2 Sales and operating profits.
5.2.1 Power Equipment Sales
Table 5 gives the total sale revenue and revenue from sale of power equipment in - 1994 by the majors in the industry. Strict comparison with regard to the sales revenue from power equipment is not possible since the company balance sheets have different product groupings. However,The data is reasonably indicative.
5.2.2 Operating profits
Table 6 gives the operating profits - 1994 (in case of BHEL1994/95) and profit to sales ratio of the majors in the industry. Separating operating profits for the power sector over the total corporate profits was not possible for the same reason as with sales data. Within this limitation, the data given for power sector is reasonably indicative.
The data clearly indicates that the priority and concern of the
majors is in keeping the shops loaded rather than aiming at high operating
profits. BHEL has the second highest operating profits to sales
ratio. This inspite of the fact that BHEL’s products are almost entirely
investment goods, with long production cycles, requiring large investment
and higher working capital margins. MNCs have a sizable portfolio of consumer
durables and consumer goods where the profit margins are higher. The highly
depreciated assets of BHEL enable BHEL to maintain a high level of profitability.
5.4 Export intensity
The enterprises in this industry have very high export intensity.
ABB
88.7 %;
GEC-Alsthom 72.4
%;
GEC
70 %,
Siemens
58 %.
On account of the relatively large domestic markets US and Japanese companies show a lower level of export intensity of 23 -33 %. BHEL has the same level of export intensity but for a different reason. BHEL’s ability to export has been largely restrained by territorial restrictions placed by its collaborators as well as the lack of support from the Govt. of India and Indian financial institutions.
6.2.1 The financial squeeze.
BHEL’s Sundry debtors are about Rs. 2500 Crores (U.S. $ 800 million) constituting about 70 % of the annual sales. Inspite of this BHEL is not considered an enterprise which provides suppliers credits. On the other hand, SEBs do not maintain any outstandings with MNCs, and MNCs provide front end credit i.e., suppliers credit. The financial institutions as well as the home Governments of the MNCs provide financial and political support.
The most significant change in policy is that the process of competitive bidding has been done away with. Even the envisaged global bidding in respect of project sites would be based either on the present terms offered by the Government of India - with 16 % guaranteed returns and 80 - 90 % PLF or would be tariff based (as is followed in Pakistan). It is unlikely that there would be tendering for equipment. For example, once a promoter is awarded a contract on a tariff based competitive bidding it would be infractuous to insist that the promoter source equipment through competitive bidding. In any case the foreign investors would insist on a financial package (suppliers credit) from the equipment supplier.
BHEL is a sub system of the Indian economy. If the economy itself is having a resource crunch, then to expect BHEL to provide credit is begging the question. Another factor is that the condition imposed on the foreign investors is that the funds raised within India should be limited to 40 % of the total project cost. If BHEL provides supplier credit by raising the funds either from its own balance sheet or from Indian financial institutions, such credit would be counted in the 40 % ceiling. Whereas credit provided by MNC equipment suppliers would leave the foreign investor to source 40 % of the project finance from India. Also, since the financial health of SEBs would further deteriorate with the induction of foreign investor power plants where the promoters would be backed with guarantees, it would be reasonable to expect that BHEL outstandings would increase, creating severe liquidity problems and almost eliminate BHEL’s capacity to provide suppliers credits except in the form of defaults by SEBs.
6.2.2 Autarky enforced by Government’s policy.
Table 7 gives the R&D expenditure in 1994 of the majors in the industry. It also give the R&D expenditure as a percentage of sales. Data relating to R&D expenditure is not comparable because the product mix of all the various enterprises is different. Almost all the MNCs have R&D intensive products like telecommunications, space and consumer goods, whereas BHEL’s products are relatively more mature technologies since they are limited to power related equipment. It is reaonable to conclude that it is not possible for BHEL, which is at present technologically contemporary, to remain so entirely on the strength of its R&D.
Technology acquisition by enterprises in the Third World has necessarily to be Government policy driven (rather than corporate policy driven) in a much more direct way than in the developed countries. This is due to several reasons. First, in the developed countries, Governments fund huge defence R&D contracts which effectively subsidise commercial product research; MNCs have a global market for their obsolete technologies;since MNCs are at the frontiers of technology, users have to take risks or do without the technology. Second, for the Third World countries producers all foreign investors (multilateral funding or any other) insist on commercially proven technologies, which for BHEL implies either a collaboration with an MNC or purchase of proprietary equipment. Third, unless the Governments of Third World countries provide budgetary support, to enable enterprises like BHEL to set up commercial sized plants, there is no way they can have commercially tested products based on in-house R&D (ironically, the Government of India has no problems with importing products which MNCs have not commercially established, a recent example is the GE’s Frame 9F(A) Gas Turbine -a commercially unproven technology - to be set up at Dhabol).
BHEL could so far remain technologically contemporary because of the protected Indian market. Access, for MNCs, to the Indian market was through BHEL. Therefore it was possible for BHEL to bargain and obtain contemporary technologies with reasonable terms and conditions. Now when the MNCs have direct access to the market there would no longer be any pressure to deal with BHEL. On the contrary there would be a sort of cartelisation to deny BHEL technology in order to weaken it as a competitor. Thus, the Government of India’s policy changes would, in fact, be imposing autarky on BHEL, ironically in the name of globalisation.
Development of thermal power equipment technology has always been closely correlated to standardisation of equipment size. Fig. 3 illustrates that both USA and USSR, inspite of following radically different economic systems, saw virtue in power equipment standardisation. (as a matter of fact, USA has a high degree of standardisation in every aspect including so trivial a thing as fast foods). On the contrary due to the pressure of the MNC lobby, India has over 20 unit sizes (these are 25 MW, 25.5 MW, 30 MW, 36.6 MW, 50 MW, 60 MW, 62.5 MW, 75 MW, 100 MW, 120 MW, 140 MW, 150 MW, 200 MW, two varieties of 210 MW, 500 MW). The new power policy of liberalisation gives a free hand to MNCs and foreign investors to import machines of any size and make. Thus unit sizes like 250 MW, 350 MW, 660 MW etc. are being introduced. The irony is that the Government of India claims that that a foreign investor - Gordon Wu would set up 16 machines of 660 MW and that there would be progressive indigenisation upto 80 % In order to supply 660 MW size units, BHEL would either have to go in for entirely unwanted collaboration and undertake expensive retooling making the 660 MW units non competitive or the indigenisation part of the story is just bluff to ward off any opposition.
6.2.3 Exodus of manpower.
In the last forty years BHEL has been able to develop a reasonably good cadre of professionally skilled manpower. Under the policy of liberalisation the restrictions on Managerial renumeration that was stipulated in the Companies Act, has been removed for the MNCs and the private sector. On the other hand, BHEL management is not free to decide the renumeration of its engineers and managers. The system followed is "sanction by the Government". The bureaucrats of the Government decide what they think constitutes a reasonable wage. Skilled turbine design engineers are, in the perception of the bureaucrats, as expandable a commodity as a clerk in the revenue department. BHEL management is a mute witness to an exodus of its skilled professionals.
6.2.4 Managerial chaos.
The Government of India has disinvested 38 % of the shares of BHEL. In due course MNCs and/or their fronts would corner a sizable portion of BHEL’s equity after which obituaries can be written on the bold attempt by generations of patriotic Indians to build an enterprise in an area that is considered the exclusive preserve of the developed countries. In fact a serious proposal was mooted, under the garb of "strategic alliance" to convert BHEL into a holding company where Government of India would hold 51 % equity and each unit of BHEL was to be converted into a subsidiary and parcelled out to MNCs (depending on their synergies) through their holding majority equity of the subsidiaries. The exposure of what came to be known as the `security scam’ put an end to that proposal.
As far as the Government is concerned it has sold 38 % of the equity to meet the revenue deficit but has not diluted its suffocating bureaucratic grip on the organisation. That is indeed a case of eating the cake and having it too.
Parliamentary control also remains undiluted. Even the day to day operations become the subjects for Parliamentary questioning. Added to this are the various committees some of which are totally irrelevant, like that on Official language which examines the use of Hindi when the possibility of using that lanuage in BHEL’s business is marginal. Such accountability serve no useful purpose except to waste a lot of managerial time and effort.
Notwithstanding the obligation placed by the Constitution of India the Government of India has absolved itself of all responsibility towards creating conditions for the national enterprise BHEL to survive and progress. The so called liberalisation and globalisation has thus been restricted only to opening the Indian market to the MNCs.
The demise of BHEL as a national enterprise and its resurrection as a part of the MNC network would not only be detrimental to India’s quest for self reliance but would push up the cost of power projects not only in India but in South Asia in particular and the Third World in general.
BHEL has been able to consolidate and survive till now. Whether it will be able to withstand the onslaught of the present process of ‘auto colonisation’ would depend on the people’s ability to reverse some of the policies of liberalisation and globalisation.
References.
Data used in this paper has been complied from various sources. The most important are:
1. An analysis of principal manufacturers of electrical equipment and their market - 3 rd. Edition, 1995 - ABS (Energy & Power), Market Research and Publishing U.K.
2. Annual Report of the working of State Electricity Boards and Electrical Departments - (Power & Energy Division) Planning Commission, Govt. of India, October 1995.
Note: The data relating to foreign investor power plants (FIPP) is as
approved by the Cabinet committee on foreign investments (CCFI).
After the cancellation of the Enron power project foreign investors have
reduced the project costs.
Table 7 - Expenditure on R&D in 1994
Enterprise
R&D expenditure as % of total
sales
U.S.$ Million
%
1
2
3
Hitachi
5522
4.0
Siemens
4844
8.9
Alcatel-Alsthom
3033
9.7
ABB
2353
7.9
Mitushibushi
1865
6.5
MHI
1315
4.2
GE
1176
2.0
GEC
644
4.0
Westinghouse
262
3.0
BHEL
14
1.2
Table 5 - Sales by major players in the power equipment industry.
(in U.S. $ million)
Enterprise
Total sales
Power sector Share of Power Sector
revenue
sales revenue
to total Sales.
1
2
3
4
Hitachi
85,307
27,091
25.2
ABB
29,718
13,432
45.2 *
Mitushi
36,528
9,280
23.8 @
GEC- Alsthom
31,394
(Alcatel alsthom)
8,822
9.5 (of Alcatel Alsthom)
16,141 (GEC) +
33.3 (of GEC’s total sales)
GE
60,109
8,355
13.9
MHI
31,284
8,190
26.2
Siemens
54,579
7,641
14.0 *
Westinghouse
8,848
1,681
19 .0
BHEL
1,133
729
64.4 *
(Note: * Includes the sale of T&D equipment; @ sales of the Heavy
Machinery Div. which includes various products like escalators, elevators
etc.Col 3 and 4 are indicative)
Table 6 - Operating profits of the industry majors.
(in US $ Million)
Enterprise
Operation profits
Operating profits as % of sales
Total
Power Sector. Total
Power Sector
1
2
3
4
5
GE
9718
1238
16.2
20.8
BHEL
165
-
14.6
-
ABB
2619
1493
8.8
11.11
GEC
1417
245
8.8
4.5
Westinghouse
619
110
7.0
6.4
Alcatel Alsthom 1778
396 * 5.7
7.2
MHI
1631
1006 @ 5.2
3.2
Mitsui
1663
899 # 4.6
9.8
Hitachi
3422
1221 $ 4.0
4.2
Siemens
522
-
1.0
-
Note: *. Incl. Transport; @. Machinery & Plant Div.; #. Heavy Machinery
Div.; $ Incl. Industrial Systems. (The data in Col.3 and 5 is reasonably
indicative, however strict comparison is not possible)