Bharat Heavy Electricals Limited (BHEL) is to foray into the information technology sector by setting up a business to business portal (B2B), at a cost of Rs 500 million
which will offer services in its core areas of engineering and power.
BHEL is a public sector giant that is engaged in heavy engineering operations, that had sales of Rs 718 mn and profit after tax of Rs 58 mn for 1998-1999.
Faced with the prospects of pressures on profit in view of escalating international and domestic competition, BHEL has been taking major initiatives in up gradation and modernization to fall in step with competitors.
The present move is a part of the overall modernization exercise.
B2B Portals are web sites that enable a manufacturer to transact with suppliers and all other intermediaries in the supply chain, except the ultimate consumer. This e-commerce venture is expected to increase the efficiency and speed of transacting as well as increase the reach of the same.
The portal shall enable BHEL to reduce input costs by accessing global markets. It shall also enable the company to eliminate layers of agents and intermediaries, ensuring further reduction in costs.
Speedy procurement of supplies and spare parts will also eliminate bottlenecks in production and ensure quicker delivery to consumers leading to increased consumer satisfaction.
The portal shall considerably cut down travelling and administrative expenses.
It is expected to be up in six months time and is expected to generate revenues to the extent of Rs 10 bn over the next six years.
Should the company set up another Business to Consumer (B2C) portal, it shall further boost bottomlines. B2C portals are web sites that facilitate access to consumers and prospective consumers through the internet. B2C portals cut down on advertising and marketing expenses and ensure better revenue realization by reaching out to a wide spectrum of consumers.
BHEL has announced third quarter results for the financial year 2016-2017. The company has reported an 18% YoY growth in sales, and a Rs 875 million net profit during the period. Here is our analysis of the results.
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