State-run power equipment maker Bharat Heavy Electricals Ltd, or Bhel, might partner private sector firms Jindal Steel and Power Ltd and GVK Power and Infrastructure Ltd to secure long-term orders, said top officials.
R.K. Saraf, head of power group at Jindal Steel, confirmed the development and said, “We are talking to Bhel since most of our equipment have been sourced from them. We plan to source these orders in phases.”
The company needs to buy boilers and turbines worth about Rs22,000 crore to install generation capacity of around 5,280MW.
“While this arrangement will guarantee us orders, it will also assure the power generation companies a timely completion of projects in an ever-increasing seller’s market,” said K. Ravi Kumar, chairman and managing director of Bhel.
“We have a very good relationship with Bhel and have placed earlier orders with them. This arrangement will ensure that when we are ready to place equipment orders for our future projects, we will be given a preferential treatment as Bhel already has a huge order book position, and there are very few suppliers in the country. Today, equipment supply is more important than setting up a power project,” said G.V. Krishna Reddy, chairman and managing director of GVK Power.
Bhel has been increasingly looking at opportunities where it not only generates orders but also blocks out emerging rivals. It posted a net profit of Rs2,815 crore on a revenue of Rs21,608 crore in 2007-08 and ended the year with an order book worth Rs50,265 crore.
By 2012, the company plans to manufacture equipment capable of generating 56,000MW. It has orders of 31,923MW and 9,775MW of equipment from unused stock.
Bhel has been increasingly criticized for failing to deliver on time that leads to delayed commissioning of projects.
“The company has already been blamed for its inability to meet its order commitments. In such a situation, how it meets the new requirements is yet to be seen,” K. Ramanathan, fellow at Delhi-based The Energy and Resources Institute had said earlier.
Bhel aims to top turnover of Rs45,000 crore by 2011-12 with capacity to manufacture equipment to power 15,000MW by the end of next year. Its current capacity is 10,000MW a year.