Elaborative SWOT Analysis of BHEL – The Largest Power Generators Of India

Quick Stats on BHEL

Founder	Government of India
Year Founded	1956
Origin	New Delhi, India
No. of Employees	31,708
Company Type	Public
Market Cap	Rs 21,066 Crore (2021)
Annual Revenue	Rs 22,066.64 Crore (2020)
Net Income/ Profit	Rs 1,472.97 Crore (2020)

 

(BHEL Power Centre, Source: India Today)

Products of BHEL

• Gas and Steam Turbines
• Boilers
• Electric Motors & Locomotives
• Generators
• Heat Exchangers
• Switchgears and Sensors
• Automation and Control Systems
• Power electronics
• Transmission systems

Competitors of BHEL

• Larsen & Toubro
• Siemens
• AAC Technologies
• Tata Steel
• ISGEC
• Cyient

After understanding the core of the company, let us now proceed to the SWOT analysis of BHEL. 

SWOT Analysis of BHEL

SWOT analysis (or swot matrix) is a strategic planning technique used to help a person or organisation identify strengths, weaknesses, opportunities and threats related to business competition or project planning. 

To better understand the SWOT analysis of BHEL, refer to the infographic below:

So let us first start by looking at the strengths of BHEL from the SWOT analysis of BHEL

Strengths of BHEL

Strengths are interval positive attributes or capabilities a person has control over and make full use of skills competencies knowledge.

• Huge Customer Base: It has a great market influence in the domestic business which makes it a huge strength for BHEL. 
• Quality: The quality of BHEL is quite strong and it provides a quality manual for the entire organization.
• Research and Development: It is a strong, innovative and creative advanced team for research and development which is a pro point. They invest 2.5% of their annual turnover in the R&D of BHEL. 
• Continuous Profits: This is a great strength for BHEL since it has been getting huge profits and dividends for years. 
• Support From Collaborators: BHEL has been getting constant and huge support from collaborators that helps for modern technologies and transform them to suit it according to Indian conditions. 
• Strong Base in Engineering: Since it has a strong base in engineering, it is stable in the market and industrial relationship. It is the largest power generation equipment manufacturer with products like gas and steam turbines, boilers, electric motors, heat exchangers, etc. 

Weaknesses of BHEL

 Weaknesses are negative aspects and attributes which have little control over. These are the areas where the business needs to improve to remain competitive.

• Longer Delivery Cycles: Its products take more time to deliver than its international competitors which can be a huge con according to the customer base. 
• Less Marketing Manufacture: BHEL lacks marketing manufacture which leads to inadequate supply. 
• Criticism: The project at Rampal of the coal power plant is criticized a lot for impacting adverse effects to the environment since it is near to the Sundarbans mangrove forest. 
• The Inability of Certain Activities: Inability of certain activities such as providing suppliers credit, soft loans and financing power projects. 
• Net Profit: BHEL’s net profit which is Rs 1.472 Crore is relatively low compared to its annual revenue of Rs 22,066 Crore. BHEL should strictly look after its expenses and competitors’ business matrix.

Opportunities for BHEL

Opportunities are uncontrollable external events a person can potentially leverage. These are favourable external factors that could give an organisation a competitive advantage.

• Demand for Power Domain: There is a huge power domain to produce more equipment. This provides a huge opportunity for BHEL.
• Ageing Power Plants: Since it has more old and required services and is in the market for a long time it has faster machinery and more market visibility compared to its competitors.
• Joint Venture with Siemens: It is a tie-up for a project which can be beneficial and will provide more scope of growth in the market. 
• Increase in Defence Budget: An increase in defence seems a good opportunity for BHEL. They can supply a required tender of locomotives to the Indian Armed Forces. 
• Procurement Process: The procurement process at BHEL is subject to audits and thus is very cumbersome. 
• Increased Private Sector Participation: Since it has a healthy work environment, it has greater circles of distribution and operation. 

Threats to BHEL

These are the factors that have the potential to harm an organization. Threats are uncontrollable external factors that might overcome or damage the strength and opportunities.

• Competitors: BHEL faces a lot more competition in every way that is national as well as international level. 
• Increase in Small Contractors: The increase in small contractors can lead to price wars which can be a huge threat for BHEL. 
• New Players in the Market: The emerging new players and competitors can be a huge threat to BHEL in the long run. 
• Associations in the Industry: Associations have reduced the company’s turnover drastically which becomes a great threat for the company.

This ends our powered SWOT analysis of BHEL. Let us conclude our learning below.