New Delhi: State-owned Bharat Heavy Electricals Ltd, or Bhel, is close to clinching a deal for 150 electric locomotives for nearly Rs800 crore to the Indian Railways, a company official said.
“We are in negotiations with the railways... We are the only one in the country to have this technology and we are doing this independently of our arrangement with GE (General Electric Co.),” said a Bhelexecutive on condition of anonymity, adding that it is expected to be announced before March.
Bhel has signed an agreement with rail products maker GE Transportation, a unit of US-based GE, to jointly make and deliver 1,000 diesel locomotives to the railways, provided it secures the order, estimated to be worth at least Rs10,000 crore.
Hedging bets: A Rajdhani Express train. Bhel is looking at locomotives as an alternative business avenue. Ramesh Pathania / Mint
Railway officials could not be contacted immediately.
Power sector analysts say manufacturing locomotives makes good business sense for Bhel because it offers a good avenue to hedge against any abrupt change in business prospects in the power sector.
“While the power business will continue to be the most important constituent of Bhel’s portfolio in the coming years, industry sectors such as railway transportation are expected to expand in a big way,” K. Ravi Kumar, Bhel’s chairman and managing director, had earlier told Mint.
Bhel also plans to enter the electronic signalling business and is in talks with Paris-based Alstom SA, telecom multinational Telus Corp. and Mitsubishi Heavy Industries Ltd for entering the business.
In a related development, Bhel has dropped acquisition plans of an East European firm that make coaches and engines for its technology. With more overseas manufacturers coming to India, “we realized we would not be cost-competitive, and hence dropped the plans,” another Bhel executive who didn’t want to be identified said, refusing to name the company.
Bhel has orders worth Rs1.15 trillion, with an annual capacity to make equipment capable of generating 10,000MW of electricity, which it plans to raise to 56,000MW by 2012. It posted a net profit of Rs2,815 crore on revenues of Rs21,608 crore in 2007-08.