Ranchi, April 11: SR Batliboi Consultants Pvt Ltd, which has been appointed by the union government to monitor the implementation of the revival plan of Ranchi-based Heavy Engineering Corporation, has recommended the recruitment of a director (marketing) and strengthening of the central marketing department of the public-sector unit."Since order booking is one of the key factors for revival of HEC, we make a strong plea for recruitment of director (marketing) at the earliest and also strengthening of the central marketing department," the report dated February 1998 said.
The HEC management has already advertised in leading national dailies for appointing promoters/marketing consultants for market survey, order booking and realisation of outstanding dues as well as related activities.
"HEC is a large engineering complex. In the past, it survived on exclusive orders from SAIL mainly. Today, on the one hand demand of capital equipment has shrunk and on the other, there is stiff competition, both domesticand global. The breakeven point stands at over Rs 550 crore approximately. HEC cannot stand alone and reach the level due to weak technological base, lack of collaboration coupled with demoralised and old work force. Thus, a normal action will not be adequate for its revival," the report stated.
"The present trend globally is to work as an EPC (engineering, procurement and contract) setup so that the jobs are traced from the conceptual state of the client. It may become too late to procure orders at `notice inviting tender' (NIT) stage. Already, some organisations have moved in this line. The notable ones are L&T Chiyoda, Bechtel, UDHE (partially), EIL (partially) and Vecon-Kilburn Ltd. HEC will also have to think in this line and that too at the earliest," the report added.
According to Batliboi, HEC has so far survived on the strength of its technical capabilities, particularly in systems designing. "The manufacturing facilities are neither unique nor do they provide an edge over its rival competitors,"the report stated. Batliboi has recommended certain measures to enable HEC to earn profits in future.
These are:
Technical tie-up with overseas process licensor or big players to get access to global technical expertise, continued research and development and a foothold in the export and domestic market; Aggressive marketing thrust in both domestic and export markets to tide over the recessionary demand conditions; and Specialised focus on reconditioning of machine tools of heavy machine tools plant and rebuilding of coke ovens of heavymachine building plant.The consultants cautioned: "Although 1997-98 shall be a bad year for the corporation, the subsequent year appears to be heading for a worse situation due to declining book-order position. The capacity utilisation levels are expected to drop significantly, unless orders are immediately procured by the corporation."
However, an HEC source said that the company is favourably placed in many of the tenders of Nilachal Ispat NigamLtd (NINL) for various packages. Orders worth of Rs 100 crore are expected soon from NINL for basic oxygen furnace, raw material handling plant and coke oven machines.
The HEC source said they are the lowest bidders for supply of 25 five cu m shovels, 20 10 cu m shovels and three draglines for Coal India Ltd in World Bank tenders. HEC is the lowest bidder for all three tenders and orders worth Rs 500 crore are expected in the near future.
Despite severe shortage of funds, orders and industrial relations, HEC has succeeded in reducing its cash loss from Rs 170 crore to Rs 48 crore during the last three financial years. The turnover in 1997-98 fell marginally to Rs 256 crore compared to Rs 263 crore in 1996-97. It would have been better if Bokaro Steel Plant had not put an inventory hold on equipment valued at Rs 9 crore, the source said.
HEC's dues from SAIL and CIL against equipment supply amount to Rs 15 crore. Moreover, the increase in gratuity ceiling from Rs 1 to 2.5 lakh has put a Rs 11-croreburden on the company which added to its cash loss during the last fiscal, the source said. According to IDBI's projections which have been sanctioned by the Board for Industrial & Financial Reconstruction (BIFR) in August 1996 for HEC's revival, the company will start earning cash profits from 1997-98 and net profits from 1998-99. The net worth will become positive during 2005-06.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
