BHEL Shelves Varanasi Plant Plan As Board Reassesses Capital Investment Strategy

New Delhi: In a strategic course correction, BHEL has called off its earlier plan to set up a new plant in Karkhiyaon, Varanasi. The decision, taken at the company’s board meeting on January 19, 2026, marks a shift in how BHEL intends to optimize its manufacturing footprint amid evolving industry dynamics.

Project Cancelled Amid Review

The primary outcome of the board meeting was the short closure of the Karkhiyaon project, originally announced in January 2024. BHEL stated that the change reflects the 'current business landscape,' prompting a reevaluation of expansion needs.

Production Shift to Existing Plants

With the scrapping of the Varanasi unit, BHEL has confirmed that the products initially planned for this plant will now be manufactured at its other facilities. This move is expected to streamline operations and avoid redundant capital expenditure.

Strategic Rethink at the Top

A company official, summarising the board’s sentiment, indicated that the decision was shaped by shifting demand patterns and internal optimization efforts. The management sees greater value in leveraging its existing infrastructure rather than expanding into new territories.

Focus on Operational Efficiency

The cancellation points to a broader strategic focus on cost control and asset utilization. Rather than pursuing greenfield projects, BHEL is likely to concentrate on enhancing output and efficiency at its current sites.

BHEL had submitted its initial expansion plan to the stock exchanges in January 2024 under SEBI disclosure norms. The January 2026 reversal reflects a decisive pivot aligned with market realities and internal assessments.

Published on: Monday, January 19, 2026, 05:40 PM IST