Saturday, 18 August 2012

Organizational Culture of BHEL

Before I tell you about the organization culture of BHEL, we need to understand what is Organization culture, and even before that what is culture.

James A F Stoner
As per James Stoner 'Culture is the complex mix of assumptions, behaviour, stories, myths, metaphors, and other ideas that fit together to define what it means to be a member of a particular society'. In other words, culture is what that distinguishes one society from the other.

Now what is Organizational Culture? As per Stoner, 'organizational culture is the set of important understanding, attitudes and beliefs shared by organizational members'. In simple terms "how things are done around here". Organizational culture defines how people interact in an organization, basic assumptions they make, how juniors are treated by seniors and vice-versa. It may also include how people behave with the women working in the organization and how customers are treated. And all of these points have a serious impact on the performance of the company.

Now lets talk about the Culture at BHEL.

One thing that every employee in BHEL knows, and the very first thing that every new employee learns is that "Customer is our God, he is our Bread and Butter". This may come as a surprise to many as BHEL being a PSU people might think that employees in BHEL may not have respect for customer. But the reality is that, BHEL keeps customer in very high regards, much more than its competitors like GE and Siemens. If you enter a BHEL office, you will find that in every floor the following quote of Gandhi is hung.
 
 "A customer is the most important visitor on our premises, he is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so."

Being customer-oriented is both strength and weakness for BHEL- Strength because BHEL is able to retain many of its customer, and weakness because many customers take advantage of such policies.

Now talking about employee-to-employee interaction in BHEL, one has to say that it is very friendly. Professional and personal life are never mixed. Even after having a dispute in a meeting, the concerned person will share a laugh over coffee or will car pool back home. Even in the inter-departmental interaction, as BHEL personnel don't consider themselves as a production managers or a procurement managers or a design engineers but as a BHEL employee. 

BHEL promotes a healthy senior-junior relationship. Every new employee is assigned a Mentor who is senior official, generally from the similar background but not from the same department as the employee. A new employee can share his or her problem with the mentor and can even form a close personal bond with him.

Even otherwise, seniors take lot of care of youngsters reporting to them both professionally and personally.

However, to explain the whole culture of a company one needs to be part of that company for really really long time, and i don't think i will do BHEL justice by trying to explain it all in a single post.

Culture is not incorporated or changed overnight. It evolves from the legacy left behind by each employee over the years. To change the culture of the company one needs to understand the exixting  culture and the reason behind it. Many companies are known for their culture, which might be strict or casual. But culture is the thing that defines those companies.

Wednesday, 1 August 2012

Suzlon- A case Study

 OVERVIEW

 

Founded                                      : 10 April, 1995
Head Quarters                             : One Earth Campus, Pune, Maharashtra, India
Founder and current CEO          : Mr. Tulsi Tanti
Markets Listed in                         : BSE, NSE
Products                                      : Wind Turbines
Revenue for 2011-12                  : 21,082 Cr Rs.
Gross Profit                                 : 1,670 Cr Rs.
Net Profit                                      : -472.59 Cr. Rs.
No. of employees                        : 13,000 plus
Total Global Installed Capacity   : 19,176 MW
Global Market Share                    : 7.6%
Global Rank                                  : 5th

The Suzlon Group is ranked as the world’s fifth largest wind turbine supplier, in terms of cumulative installed capacity. The company’s global spread extends across Asia, Australia, Europe, Africa and North and South America approaching 20,000 MW of wind energy capacity installed in 28 countries, operations in 33 countries, a workforce of over 13,000.

The Group offers one of the most comprehensive product portfolios – ranging from sub-megawatt on-shore turbines at 600 Kilowatts (KW), to the world’s largest commercial 6.15 MW offshore turbine – built on a vertically integrated, low-cost, manufacturing base. The Group – headquartered at Suzlon One Earth in Pune, India – comprises Suzlon Energy Limited and its 78 subsidiaries (15 Indian and 65 International), including REpower Systems SE, a leader in offshore wind technology. 

 

ORIGIN And HISTORY

Suzlon is a very western sounding name for an Indian company. The origin of the name of this wind energy company is very much Indian. ‘Suz’ in Suzlon, comes from the Gujarati word ‘suz-bhuz’, meaning intelligence and ‘lon’ — a Gujarati way of pronouncing the English word ‘loan’. The company was founded by Mr. Tulsi Tanti, a Gujarati businessman from Rajkot.

The story goes that the Tanti family who were into textiles. In the year 1995, the Mr. Tulsi Tanti realised that India's shaky power grid and the rising cost of electricity offset any profits the company would make. After providing electricity for his own company, Tanti realized that other companies in India could also greatly benefit from being sold wind power technology and advised on its use. With the help of some of his friends of Rajkot, he moved into wind energy production as a way to secure the textile company's energy needs, and founded Suzlon Energy. Suzlon adopted a business model wherein clients would be responsible for 25% of the up-front capital investment and Suzlon would arrange the remaining 75% on loan.

So the company conducted their business with lot of ‘suz-bhuz’ and by providing ‘loans’.

 MAJOR MANUFACTURING PLANTS

Suzlon has 8 major manufacturing plants in India and 1 in US. They recently sold off their manufacturing plant in china to repay their FCCBs debt.

In India various plants are located at-

Other than that they have a manufacturing plant in Pipestone, Minnesota in the USA. The plant was established in the year 2006 for manufacturing of rotor blades and to send a message that suzlon energy is not an Indian market company but a global company.

VISION

 
To be the technology leader in the wind sector
To be in the top three wind companies in all the key markets of the world
To be the global leader in providing profitable, end-to-end wind power solutions
To be the 'company of choice' for stakeholders

CORE VALUES

Agility
Creativity
Adding Value
Committed
Integrity

PRODUCTS AND SERVICES

Suzlon offers end-to-end wind power solutions from assembly, installation to commissioning.
The various other products and their specification offered by Suzlon Energy are:-



Product Name Rated power Cut-in wind speed Rated wind speed Cut-off wind speed Survival wind speed
S52-600 kW 600 KW 4 m/s 13 m/s 25 m/s 59.5 m/s
S64-1.25 MW 1250 kW 3.5 m/s 14 m/s 25 m/s 59.5 m/s
S66-1.25 MW 1250 kW 3 m/s 14 m/s 22 m/s 52.5 m/s
S82-1.5 MW 1500 kW 4 m/s 14 m/s 20 m/s 52.5 m/s
S88-Mark II DFIG 2250 kW 4 m/s 14 m/s 25 m/s 52.5 m/s
S82-2.1 MW 2100 kW 4 m/s 14 m/s 25 m/s 59.5 m/s
9X Suite - 2.1 MW 2100 kW 4 m/s 14 m/s 20 m/s 52.5 m/s

 FINANCIAL PERFORMANCE

 The financial performance of the company has not been great over the last few years. Although their sales have seen just a slight dip, but the net profits have dropped a lot and have become negative.

Dip in sales can be attributed to the increase in competition, specially from Chinese OEMs and the decreasing growth rate of the industry. Inspite of that Suzlon has maintained its healthy market share and 5th position in the world.

The area of concern is their bottomline. Suzlon in last three years have not been able to show net profits. This is due 2 reasons. Firstly, they have large no. of assets and thus have a high depreciation. Secondly, Suzlon have a large dedt (11,165 Cr Rs by the end of march 2012) on which they are paying high amount of interest.
And not only that, a larger percentage of this debt is going to mature soon for which Suzlon should raise capital.

But things are not as bad as it sounds. There operating profits are steadily rising and they have a huge surplus to cover up the debts. And that is why 11 banks lend money (1500 Cr Rs.) to Suzlon recently when they were required to redeem their FCCBs worth $360 million. But another $210 million worth FCCBs are due for redemption in October.

SWOT ANALYSIS

Strengths

Integrated Business Model
End-to-end Solutions
Vertically Integrated Supply Chain
Market Leader
Confidence OF Financing Institutes
Research & Development

Weakness

Financial Performance
High Debt Short Term Liabilities
FFCB Of $360 mn Matured In June
FFCB Of $210 mn Maturing In October
High Inventory Level 5000 Cr Rs

Opportunities

Steady Growth In Demand CAGR of 7%
Off-shore Market And Foreign Markets
Government Policies Favouring Wind Energy
Environmental Concerns
High Growth in Asian Markets

Threats

Slowdown in Demand
Nuclear Energy
Chinese OEMs
Technology Risk
Shrinking Order Book (2 years only)
Competitors Increasing Capacities
Dipping Share Price

RECOMMENDATIONS

•Investment in R & D
•Reduction of Inventory Levels
•Concentrate on Off-Shore markets
•Synergies with RE Power
•Focus on Indian And Chinese Markets
•Passing on benefits of vertical integration to costumers
•Diversification into other renewable energy
Solar Power
Bio-Mass