Power equipment and engineering company ABB Ltd hopes to get Rs2,000 crore ($500 million) in new orders if it manages to win contracts from developers of ultra mega power projects (UMPPs) as also from its strategy of making India a hub to cater to demand from South-East Asian countries.
“We are in talks with Tata Power Ltd and Reliance Power Ltd for supplying electrical balance of plant equipment for the three 4,000MW-each UMPPs to be developed by these utilities. Each of these orders is valued between Rs200 crore and Rs400 crore,” said K. Rajagopal, regional chief financial officer, South Asia Region, ABB.
Such equipment comprises capacitors, transformers, switch gear, control systems and disconnecters.
While Reliance is developing two such projects, at Sasan in Madhya Pradesh and Krishnapattnam in Andhra Pradesh, Tata Power is developing the Mundra project in Gujarat.
“The bidding process for supplying balance of equipment for Mundra is on and in early stages, and will take at least three-four months for completion,” said a Tata Power spokesperson. “We will not comment further on this issue.” A spokesman for Anil Dhirubhai Ambani Group, which is the promoter of Reliance Power, declined to comment.
ABB also plans to use its operations in India to cater to the demand for power substations in Vietnam, Indonesia and Malaysia. The power substation is used to convert high voltage electricity for the retail customer.
Quality edge: A power transmission plant near Muzaffarnagar, Uttar Pradesh. ABB’s export revenues contribute 10% to the company’s operations in India. (Rajeev Dabral / Mint)
“We are planning to supply power substations to Vietnam, Indonesia and Malaysia. The value of these orders is around $100 million and we plan to complete the supplies by 2008,” Rajagopal said.
Export revenues contribute 10% to the company’s operations in India, while India operations contribute 7% to ABB’s worldwide operations.
ABB India is also focusing on the oil and gas sector for supplying control and data acquisition systems and sees significant business potential as India has already awarded 162 exploration blocks through the New Exploration Licensing Policy. “We are eyeing a Rs300 crore order from Oil and Natural Gas Corp. Ltd for...the company’s expansion plans,” Rajagopal added.
“In a competitive bidding environment, they (ABB) lose due to their higher costs,” said a power sector analyst, who did not wish to be identified due to his firm’s business considerations. “However, in the case of negotiated orders, they are at an advantage due to their higher quality of products.”
On the automation front, ABB is focusing on sectors such as steel, non-ferrous metals, pulp and paper, cement, oil and gas, building and applications.
ABB registered a net profit of Rs4,916 crore in the year to December 2007 on revenues of Rs60,014 crore. The spurt in orders last year strengthened the company’s order backlog, 60% of which is for private sector projects, to Rs5,026 crore and the company plans to invest $100 million over next two years in its India operations.
ABB has 6,000 employees in India and plans to raise it to 7,000 by the end of 2008.