BHEL Bags Major ↑ Rs 1500 Crore Order from SAIL for Captive Power Plant at IISCO Steel Plant

State-owned engineering giant Bharat Heavy Electricals Limited has secured a significant order from Steel Authority of India Limited for setting up a Captive Power Plant at the IISCO Steel Plant in Burnpur.

The Letter of Acceptance was received on February 17, 2026, and the company informed both BSE and NSE through a regulatory filing on the same day.

Order Details at a Glance

Scope of Work

BHEL will handle the entire project on a turnkey basis. The scope includes:

• Design and engineering

• Manufacture and supply of equipment

• Transportation and unloading

• Storage at site

• Erection and commissioning

• Performance guarantee tests

The only exclusion is civil work, which will likely be handled separately by SAIL or other contractors.

This is a comprehensive package where BHEL takes end-to-end responsibility for delivering a fully functional captive power plant.

Project Timeline

The contract must be executed within 39 months from the effective date of contract. The effective date is typically the date when all conditions precedent are fulfilled and the contract becomes fully operational.

For a project of this magnitude, 39 months is a reasonable timeline. It includes everything from design to commissioning, allowing sufficient time for engineering, manufacturing, supply, and installation.

Strategic Importance

This order is significant for multiple reasons.

First, it strengthens BHEL's position in the power equipment sector. Captive power plants for steel plants are specialized projects requiring technical expertise that BHEL possesses.

Second, it reinforces the relationship between two major PSUs. BHEL and SAIL both operate under the Ministry of Heavy Industries and Ministry of Steel respectively. This collaboration showcases public sector synergy.

Third, the order value of Rs 1200-1500 crore is substantial. For context, this is a significant addition to BHEL's order book, which currently stands at over Rs 1 lakh crore.

About the Project

The Captive Power Plant is part of the 4.08 MTPA crude steel expansion project at SAIL's IISCO Steel Plant in Burnpur, West Bengal.

IISCO Steel Plant is one of SAIL's integrated steel plants with a long history. The expansion project aims to increase production capacity and modernize facilities. A reliable captive power plant is essential for uninterrupted steel production, making this a critical component of the overall expansion.

Captive power plants ensure steel plants have dedicated power supply, reducing dependence on the grid and protecting against power fluctuations and outages.

BHEL's Expertise in Power Projects

BHEL has extensive experience in setting up power plants across India and internationally. The company has supplied equipment for over 70 percent of India's total installed power generation capacity.

For captive power plants specifically, BHEL has executed numerous projects for steel plants, cement plants, and other industries. This order adds to that portfolio.

The company's in-house capabilities in design, manufacturing, and project management give it a competitive edge in turnkey contracts.

Financial Impact

While the exact order value is not disclosed, the company has stated it falls in the range of Rs 1200-1500 crore excluding GST.

Including GST, the total contract value would be higher. For BHEL, this translates to revenue recognition over the project duration of 39 months.

The order will contribute to BHEL's top line starting from the current financial year and continue over the next three to four years.

Margins on such turnkey projects typically range from 8 to 12 percent depending on execution efficiency and cost management.

SAIL's Expansion Plans

SAIL has been undertaking modernization and expansion of its steel plants to increase production capacity and improve efficiency.

The IISCO Steel Plant expansion is part of this broader strategy. Once completed, it will enhance SAIL's overall crude steel production capacity and help the company meet growing domestic steel demand.

India's steel consumption has been rising steadily, driven by infrastructure development, construction, and manufacturing. PSUs like SAIL are ramping up capacity to reduce imports and support Atmanirbhar Bharat initiatives.

Related Party Transaction Status

BHEL has clarified that the promoter or promoter group companies have no interest in SAIL, the entity awarding the contract.

The order does not fall under related party transactions. It is an arms-length deal between two independent public sector companies.

This is important for corporate governance and regulatory compliance. SEBI listing regulations require disclosure of related party transactions, and BHEL has confirmed this is not applicable.

Stock Market Reaction

The order announcement came after market hours on February 17. The impact will be seen in trading on February 18.

Typically, large order wins boost investor sentiment. BHEL shares have been in focus recently due to increased order inflow and government focus on power sector capex.

Investors will watch for any management commentary on the order and its impact on margins and execution timeline.

BHEL's Order Book Position

As of the last disclosed quarter, BHEL's order book stood at over Rs 1,05,000 crore. This included orders from power, industry, and transportation segments.

The new SAIL order adds to this already healthy pipeline. It also diversifies BHEL's order book by adding another industrial captive power project.

A strong order book provides revenue visibility for the next three to four years, which is positive for long-term investors.

About BHEL

Bharat Heavy Electricals Limited is India's largest power generation equipment manufacturer. It is a Schedule A Maharatna PSU under the Ministry of Heavy Industries.

The company has a wide product portfolio including thermal, hydro, nuclear, and gas-based power plants, as well as equipment for transmission, industry, and transportation.

BHEL has 16 manufacturing units, 8 service centers, and 4 regional offices across India. It has also executed projects in over 80 countries internationally.

About SAIL

Steel Authority of India Limited is the largest steel-making company in India and a Maharatna PSU under the Ministry of Steel.

SAIL operates five integrated steel plants and three special steel plants, producing a wide range of steel products for construction, engineering, defense, and automotive sectors.

The IISCO Steel Plant at Burnpur is one of SAIL's oldest and most important facilities.

What This Means for Investors

For BHEL shareholders, this order is positive but expected. The company has been consistently winning orders in its core segments.

The key things to watch are execution capability and margin profile. BHEL has faced challenges in the past with project delays and margin pressures. If the company executes this project efficiently and within timeline, it will boost confidence.

For SAIL, the expansion project moving forward is a positive sign. It indicates the company is progressing with its capex plans, which should eventually lead to higher production and revenue.

Outlook for Power and Steel Sectors

The power and steel sectors are closely linked. Steel plants need reliable power, and power plants need steel. Both sectors are seeing increased activity due to government infrastructure spending.

The Union Budget has allocated significant funds for infrastructure, which drives demand for both steel and power equipment. PSUs in both sectors are expected to benefit from this spending cycle.

Orders like this one between BHEL and SAIL demonstrate the virtuous cycle of public sector investment driving industrial growth.

Bottom Line

BHEL has secured a significant order from SAIL worth Rs 1200-1500 crore for a captive power plant at IISCO Steel Plant, Burnpur.

The turnkey contract includes design, supply, erection, and commissioning, to be completed in 39 months.

This order strengthens BHEL's order book and reinforces its position in the industrial power equipment segment.

For SAIL, it moves forward the critical expansion project at IISCO Steel Plant.

Both PSUs stand to benefit from this collaboration as India's infrastructure and industrial growth story continues.