C H A P T E R - IV

BHEL Background History and Profile

Introduction

Establishedin1964, BHEL is India’s largest engineering and manufacturing

company of its kind engaged in the design, engineering, manufacture,

construction, testing, commissioning and servicing of a wide range of products

and services for the core sectors of the economy, viz. Power, Transmission,

Industry, Transportation, Renewable Energy, Oil & Gas and Defence. The

company has been earning profits continuously since 1971-72 and paying

dividends since 1976-77. In recognition of its consistent high performance,

BHEL has been conferred with ‘Maharatna' status by Government of India

on1st February, 2013. It is now one among the seven Maharatna PSEs.

Established more than 40 years ago, BHEL is the largest engineering and

manufacturing enterprise of India in the energy & infrastructure related sectors.

BHEL is amongst world's rarest few who have the capability to manufacture

entire range of power plant equipment. Since its inception, BHEL is

maintaining a consistent track record of growth, performance and profitability.

The company has grown in stature over the years with continued inflow of

orders, manufacturing prowess, continued thrust on technology leading to a

strong presence in domestic and international markets as a major supplier of

power plant equipments besides establishing substantial inroads in select

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 segment of products in Industrial sector and Railways.

Expansion

The company has realised the capability to deliver 15,000 MW p.a. power

equipment capacity and the further expansion program is underway to reach

20,000 MW p.a by 2012. BHEL caters to core sectors of the Indian Economy

viz., Power Generation and Transmission, Industry, Transportation, Renewable

Energy, Defence, etc. The wide network of BHEL's 15 manufacturing divisions,

2 repair units, 4 power sector regions, 8 service centres, 15 regional offices, 2

subsidiaries and a large number of Project Sites spread all over India and abroad

enables the company to provide most suitable products, systems and services-

efficiently and at competitive prices. The company has entered into a number of

strategic joint ventures in supercritical coal fired power plants to leverage

equipment sales besides living up to the commitment for green energy

initiatives.

Awards

BHEL, where Quality Systems as per ISO-9000 have taken deep roots, has now

made significant achievements in Business Excellence by securing recognition

certificates from CII for four out of five units that participated in the CII-EXIM

Business Excellence Award scheme in 2010-11. Continuing its tradition of

bagging prestigious national/international awards, the company has been

honoured with several awards which included "EEPC Star Performer Award" in

the Product Group of Project Exports for 20th consecutive year; SCOPE Award

for Excellence and Outstanding Contribution to the Public Sector Management:

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 "India Power Award for Equipment Manufacturing and for electrifying

Lakshadweep Islands with Solar Power" from Council of Power Utilities; Six

Prime Minister's Shram Awards including one "Shram Bhushan" and three

"Vishwakarma Rashtriya Puraskars"; "IEI Industry Excellence Award 2010" for

Overall Business Excellence and Industry Practices from the Institution of

Engineers (India); "NDTV Profit Business Leadership .

Multifarious Activities

BHEL has also emerged as a major supplier of controls and instrumentation

systems, especially distributed digital control systems for various power plants and

industries. The Industry business sector of the company is fully geared to execute

EPC contracts for captive power plants from concept to commissioning. utilities.

BHEL has also emerged as a major supplier of controls and instrumentation

systems, especially distributed digital control systems for various power plants and

industries. The Industry business sector of the company is fully geared to execute

EPC contracts for captive power plants from concept to commissioning. BHEL is a

leading manufacturer of a variety of Industrial Systems & Products to meet the

demand of a number of industries , like metallurgical, mining, cement, paper,

fertilizers, refineries & petro-chemicals etc. besides captive/industrial power

utilities. BHEL has supplied systems and individual products including a large

number of co-generation Captive power plants, Centrifugal compressors, Drive

Turbines, Industrial boilers and auxiliaries, Waste heat recovery boilers, Gas

turbines, Pumps, Heat exchangers, Electrical machines, Valves, Heavy castings

and forgings, Electrostatic precipitators, ID/FD fans, Seamless steel tubes etc. to a

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 number of industries other than power utilities. BHEL possesses expertise to

design, manufacture and service various types of onshore rigs to suit the Indian

service conditions. The range of equipment covers onshore deep drilling rigs,

super-deep drilling rigs, heli-rigs, work-over rigs, mobile rigs and desert rigs with

matching draw works and hoisting equipment. BHEL now has the capability to

manufacture conventional on shore deep drilling rigs up to a depth of 9,000 meters,

mobile rigs to a depth of 3,000 meters and well servicing rigs to a well depth of

6,100 meters. The company is in the process of manufacturing environment

friendly AC-technology based oil rings for on shore application.

International Arena

BHEL is supplying onshore drilling rig equipment viz. Draw works, Rotary-table,

Traveling block, Swivel, Mast and Sub structure, Mud systems and Rig electrics,

Well heads & X-Mas tree valves upto 10,000 psi rating for onshore as well as

offshore application to ONGC, Oil India Ltd. and Private Drilling Companies. In

international arena, the prevailing environment of heightened uncertainties

worsened by political turmoil in the Arab world has adversely affected the business

prospects of BHEL's traditional markets. In spite of such situation, BHEL was able

to sustain its exports momentum and expanded its foot print in new markets. The

company is poised to maintain its references in the overseas market encompassing

almost the entire range of products and services, covering Thermal, Hydro and

Gas-based tur nkey power projects, Substation projects, Rehabilitation projects,

besides a wide variety of products like Transformers, Motors, Compressors,

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 Valves, Electrostatic Precipitators, Photovoltaic equipments, Insulators, Heat

Exchangers, Switchgears etc. The company has been successful in meeting the

requirements of international markets in terms of complexity of work as well as

technology, quality and other requirements. BHEL has proved its capability to

undertake projects on fast-track basis. Continued focus on After-Sales-Services led

to orders for Spares & Services from UAE, Bangladesh, Nepal, France, Sri Lanka,

Kazakhstan, Iraq, New Zealand, Malta, Thailand, Yemen and Libya. Besides

undertaking turnkey projects on its own, BHEL also possesses the requisite

flexibility to interface and complement other international companies for large

projects, and has also exhibited adaptability by manufacturing and supplying

intermediate products.

The company has been successful in meeting the requirements of international

markets in terms of complexity of work as well as technology, quality and other

requirements. Continued focus on After-Sales Services led to orders for Spares

& Services from Indonesia, Bhutan, Oman, Malaysia, Bangladesh, Vietnam,

Srilanka, Saudi Arabia and UAE during 2012-13. BHEL also possesses the

requisite flexibility to interface and complement other international companies

for large projects, and has exhibited adaptability by manufacturing and

supplying intermediate products. As a part of its aim to expand offerings

through strategic tie-up in International arena, an MoU has been signed with the

Ministry of Energy and Industry, Tajikistan for setting up of two Hydro Power

Projects (2x50 MW) on Zeravshan River, Tajikistan. As a part of establishing

long-term relationships with key customers who can bring longlasting value to

the company, Enterprise Framework Agreement (EFA) has been signed with

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 Shell for the supply of Gas Turbine Generator (GTG) packages to select Shell

locations in Asia-Pacific, Middle-East, Central Asia, Eastern Europe and Africa.

The company is firmly perched to expand its vista by taking a number of

strategic business initiatives to fuel further growth in international business

which includes exploration of opportunities in solar energy related projects,

equipments and projects in Transmission & Distribution arena.

Organization is a mechanism or structure that enables living things to work

effectively together. Sound organization can contribute greatly to the continuity

and success of the enterprise. Organization is more than a chart – it is the

mechanism through which management directs, co-ordinates and controls the

business. It is, indeed, the foundation of management. If the organization plan is

ill designed, if it is merely a makeshift arrangement, then management is

rendered difficult and ineffective. If, on the other hand, it is logical, clear cut

and streamlined to meet present day requirements, then the first requisite of

sound management has been achieved. Moreover, the sound organization

facilitates administration of the company and its parts, encourages growth and

diversification and helps to improve the operation of the business as a whole.

The following sector presents institutional background of BHEL.

The manufacture of additional types of turbines and generators for power

stations, boilers and other electrical machines the Haridwar, Hyderabad and

Tiruchirapalli plants were to operate under the overall control of Bharat heavy

Electrical limited as a separate corporate entity. BHEL, Hyderabad soon

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 diversified its activities by absorbing latest technologies from world leaders to

meet the new challenges and changing needs of the country. Today, BHEL

Hyderabad is an integral part of the industrial scene in India. And catch to the

needs of industries viz., Fertilizers, Steel Sugar, Paper, Cement, Refineries,

Chemicals & Petrol-chemicals, Rayon’s etc., The following table explains the

growing investment and production turnover pattern of select enterprise during

last six years.

Institutional Background- BHEL -Hyderabad

Electrical energy continues to be one of the basic and foundational inputs for

the industrial development of a nation and also perform the role of a catalyst in

the transformation of economy from primitive or traditional state to advanced or

modern status. In tune with its philosophy on industrial development, especially

pertaining to electrical energy, the Government of India entered the field of

electrical industry with the commissioning of Heavy Electrical India at Bhopal

in the year 1955. Later, on the basis of a review of the country’s requirements of

power generation and transmission equipment, three more plants were set up at

Hardwar, Hyderabad and Tiruchirapalli with separate Russian and

Czechoslavian collaboration. The organizational set up of the Heavy Electrical

Industry working under two separate companies vis. Heavy Electrical India

Limited and Bharat Heavy Electrical Limited came up for review in 1971.

Later, a high level Action Committee was set up by the Government to enquire

into the working of the enterprises. The recommendations of the Action

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 Committee were approved by the Government of India and as a result the

Heavy Electrical India Limited controlling the Bhopal unit was merged with

Bharat Heavy Electricals Limited in order to ensure optimum utilization of the

total available resource and expertise. As a first step towards the merger, a

common Chairman and Managing Director was appointed in July 1972 for both

the companies. The accounts of the two companies were integrated with effect

from 31st March 1973 and the structure of the two companies was ‘dejure’

merged with effect from 1-1-1974. Hence the BHEL had been operating as a

multi-unit company. The following paragraphs explain organizational structure

both at corporate and Unit level.

Organizational Structure - Corporate Level

At the corporate level the BHEL organization is headed by a Governing Board,

which is appointed by the President of India from time to time. The Board

consists of minimum two and maximum, fifteen members. The Directors are

appointed in consultation with the Chairman and Managing Director. The non-

official part-time Directors are appointed for a period of three years but official

and full time Directors are not given any particular term or appointment. The

Directors have the power to reserve the following matters for the decision of the

Government of India.

(a) Acquisition of property

(b) Appointment to all posts carrying remuneration of Rs. 3000/- or above.

(c) Profit sharing

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 (d) Formation of subsidiary company or companies

(e) Any matter relating to sale, lease, exchange, mortgage and/or disposal

whether of the whole or part of the undertaking

(f) Any matter relating to the promotion of company

(g) Any agreements involving foreign collaborating proposed to be entered into

by the company and

(h) Purchase and contracts of a major nature involving substantial capital outlay

which are in excess of powers vested in the company.

The Chairman and Managing Director functions are in a dual capacity as the

Chairman of the Board of Directors and as the Managing Director. As the Chief

Executive, The Chairman and Managing Director of the company is to ensure

that its affairs are so conducted that the targets set for completion of the

projects, optimum production and profitability, are actually achieved in time

and with optimum efficiency.

Organizational Structure – Unit level

The BHEL Hyderabad Unit, situated at Ramachandrapuram, in Medak district

of Andhra Pradesh came into existence in 1963. It diversified its activities by

absorbing latest technologies from world leaders to meet the new challenges

and changing needs of the country. Today, BHEL, Ramachandrapuram Unit is

an integral part of a host of core industries viz., fertilizer, steel, sugar, paper,

cement, refineries, oil, chemical, petrochemical, rayon, etc., The Unit is headed

by the Executive Director. He is the Chief Executive of the company and is

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 appointed by the President of India in consultation with the Board of Directors,

as a head of the unit, he will discharge the following powers.

1. In respect of matters falling within their powers, Executive Director shall

exercise powers in consultation with Financial adviser and Chief Accounts

Officer of the Unit concerned who should be consulted before expenditure is

incurred on new capital items, conditions of contracts for sales as well as

purchases, pricing policies, evaluation of tenders, issue of regulations and

generally all matters having financial bearing.

2. For submitting tenders and quotations and entering into contracts for the sale

of company’s products and services, the Executive Directors powers will be

subject to the general conditions of sale and the pricing policy, and other

regulations, if any, as laid down by higher authority from time to time.

3. Executive Director will assume full powers and complete responsibility to

meet any emergency, affecting the safety of the company’s assets like flood,

fire, strike, etc., provided immediate report is made to the Chairman or

Board and sanction or approval is obtained.

The Executive Director is aided and assisted by a number of competent and

professional managers in the discharge of his function. A Deputy General

Manger is made directly responsible for the complete production activity of

Heavy electrical power plant. In the absence of a works manager in -charge of

production shops, about a half a dozen shop superintendents reports to the

Deputy General Manager. The other officers who report to the Deputy General

Manager are:

1. Chief of External Erection

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 2. Material Manager

3. Manager in-charge production, planning and control

4. Joint Personnel Manager

The crucial importance as the public sector undertakings to the economic

development as the country needs no emphasis .The growth as public sector

enterprises in Indian is largely a post –independences phenomenon. The

philosophy and programme as public sector undertaking have been incorporated

in the industrial policy resolutions of 1948 and 1956. The public sector in Indian

has grown to a larger extent covering a wide range as productions, manning,

marketing, trading, financial, institutions public utility seruices etc. Moverover,

its role in eradicating imbalances in the economic structure and in reducing the

scope for accumulation as wealth and large incomes in private hands has also

been well recognized. The investment-wise the public and sophisticated

technology wise the public sector enterprises have come to occupy the

commanding role in the economy as the country .In this context public sector

has to pay its role as a model employer requires sound base of industrial relation

for sustaining and developing high levels of productions.

Evolution of Industrial Relations in Public Sector

Immediately after independence in the interest of the national economy

government considered necessary to develop harmonious Industrial relations is

public sector Undertakings. A Tripartite conference was convened in 1947 at

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 which the industrial truce resolution was adopted giving paramount importance

to the maintenance of industrial peace. The minimum wages Act. The factories

Act were all enacted in [Link] the period that followed since 1951 great

importance has been giving to maintenance of industrial peace. The first given

year plan viewed that the employer-employee relationship has to be con

conceived of as a partnership in a consistructive endeavor to promote the

satisfaction of economic needs of the community in the best possible manner .It

insisted that there should be the closest collaboration through consultative

committees at all levels between employers and employees for the purposes of

increasing production, improving quality, reducing costs and eliminating waste

etc.

The second five years plan evolved certain norms, mechanisms and

practices –formula for need –based minimum wage, wage boards, guidelines of

rationalization, code of discipline, code of conduct etc, to improve the industrial

peace. Later, in the third five year plan bonus act was passed and right of an

individual worker come to be better safeguarded by amending the industrial

disputed act of 1947. Very soon, the act provided for the constitution of works

committees, which may act to remove the frictions between employer and

workers in day –to-day working .The act, by an amendment in 1950, also

established the labour appellate tribunals. Although after having streamlined the

legal machinery, the central government directed its efforts towards promoting

joint consultation and collective bargaining. The code of discipline 1957 and

grievance procedure 1958 were the outcome of experimenting joint

consultations.

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 One more device in industrial relations machinery was setting up pf joint

management councils, which were aimed at to create increased councils, which

were aimed at to create increases consciousness among the workers in regard to

higher productivity and to promote a sense a belonging to the enterprise by

associating labour progressively in their management. Besides, the bi-partite

consultative machinery, and elaborate tripartite consultative machinery was also

promoted. Such machinery consists of the India labour conferences, the

standing labour committee, the industrial committees and the tripartite joint

consultative board of industry and [Link] agencies was supposed to serve

as a useful forum to inject a consensus on the issues affecting labour and

management.

In spite of all the above efforts of the government it was found that in most of

the public sector understandings in Indian, the relations between management

and workers have not been cordial. The mechanism of conciliation and

mediation as primary agencies deals apparently with largest number of disputes.

But these agencies are not functioning effectively due to the retime limit placed

on the conciliation proceedings. moveover; its effectiveness has also been

limited due to absence of will trained conciliators. Further, the failure of the

conciliation machinery accounts for the increase in the number of cases

submitted to adjudication machinery. Its Existence, many a times, tempts labour

to resorts to adjudication rather than to conciliation or voluntary arbitration or

even collective bargaining. Although the laborious process involved in

adjudication often delay the settlement of disputes and it hardly brings for better

industrial relations. In regard to voluntary arbitration also the parties have

certain reservations about its efficacy. The absence of the provisions for appeal

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 against perverse awards and the lack of experience and trained arbitrators

rendered its use rather risky and uncertains. Further, it also involve long delays

in resolving the disputes. The statutory machinery has also failed, partly

because of the defective procures in serving its objectives of promoting

industrial peace and harmony. Not only that the statutory and voluntary

mechanism has failed to stem the rising tide of labour unrest, they have been

less successful in labour management relations. In fact, as the industrial

relations machinery has been broadened and strengthened, the conflict have also

become more intensive and as longer duration .The direct and indirect impact as

the growing labour unrest on the law and order situations, also on industrial

production and labour earnings have been grace adversities in the industrial

relation in recent years. Therefore round industrial machinery is an essential

prerequisite for public sector organizations. Moreover sound successful

industrial relations machinery should have the following basic requirements.

1) Top –management support

Since industrial relations is a functional staff service, it must derive authority

from the line organization.

2) Sound personnel policies

They constitute a business philosophy for the guidance of the human relations

decision of the enterprise

3) Adequate practices

Adequate practices have to be developed by professionals in the field to assist

the policy makers of the units.

4) Detailed supervisory training

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 To carry out the policies and practices by the industrials relations State, the job

supervisions must be trained in details and the significance of the policies must

be communicated to the employees. They must be trained in leadership and

communication

5) Follow-up of results :

Constant review of the industrial relations programme is necessary not only

to evaluate existing practices but also as a check on certain undesirable

tendencies. In any individual organization, employer-employee relationship

is not stable but dynamic .In the dynamic public sector environment a sound

industrial relations machinery to resolve the conflicts is need of the hour.

Summing Up

To sum up sound industrial relations are essential for sustaining industrial peace

and also to increase production in public sector enterprises. In Indian attempts

have been made since independence to develop a sound industrial relations

machinery in public sector. The first, second, and third five year plans

specifically stressed the importance of industrial relations in public sector and

made an attempt to develop industrial relation machinery in spite of these

efforts employee-employer relations in sector has not been cordial. The

dynamic public sector environment require a sound industrial relations

machinery and its should be supported with sound personnel policies and

practices. The top management support is essential pre – requisite for sound

industrial relations machinery. Sound organization can contribute greatly to the

continuity and success of the enterprise. BHEL is a well-diversified

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 organization both at corporate and Unit level. The powers and functions are so

distributed to avoid overlapping of functions in the enterprises. The BHEL,

Hyderabad Unit is headed by the Executive Director who is aided and assisted

by a number of competent and professional managers in the discharge of his

functions. The study has been observed that the organizational structure of

BHEL, Hyderabad Unit designed in such a way to achieved optimum

productions with optimum efficiency.

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