New Delhi: India’s biggest power equipment maker, Bharat Heavy Electricals Ltd, or Bhel, plans to triple investment in plants supplying overseas manufacturers of nuclear reactors if the Indo-US nuclear agreement is sealed.
“If the nuclear deal comes through, we are quite confident there will be a lot of orders in this area and we don’t want to be left out,” chairman and managing director K. Ravi Kumar said in New Delhi, where the company is based. “We will invest depending on the volume.”
State-controlled Bhel plans to spend Rs1,500 crore in two years building plants to supply components for reactors of 1,600MW capacity, Kumar said on Tuesday. Without the accord, Bhel will invest Rs500 crore to build steam turbine generators and other components for 700MW plants designed in India, he said.
The accord with the US can generate more than $10 billion (Rs42,700 crore) of orders for Indian companies, including Bhel and Larsen and Toubro Ltd, by 2012 if the planned projects are awarded, UBS AG analysts Suhas Harinarayanan and Pankaj Sharma wrote in a note to clients on 10 July.
Bhel will set up a 50-50 venture with state-run Nuclear Power Corp. of India Ltd (NPCIL) that will supply components for nuclear plants with a capacity to generate 700MW, 1,000MW and 1,600MW of power, Kumar said.
The company will also seek overseas partners to provide technology for these plants, he said, declining to name the companies.
The company aims to expand its nuclear power plant business because of wider profit margins, Kumar said. The gross profit margins for such plants would be as much as 30%, compared with about 22% for thermal power plants, Kumar said.
Bhel has provided 80% of the equipment used by NPCIL’s installed capacity of 4,120MW. In April, Bhel agreed to set up a venture to make nuclear plants that will seek technology to make steam turbine generators of 700MW or more.
Areva SA, General Electric Co., Toshiba Corp.’s Westinghouse Electric Corp. and Russia’s atomic energy agency Rosatom Nuclear Energy State Corp. are among four manufacturers of reactors that would share $14 billion of orders from India when the nuclear agreement is signed, NPCIL had said in August.