Bhel expects $2.5 bn orders in 4-6 weeks

Bhel expects $2.5 bn orders in 4-6 weeks

Mumbai: India’s largest power equipment maker, Bharat Heavy Electricals Ltd (Bhel), expects to close orders worth about $2.5 billion (Rs12,225 crore) in the next four-six weeks as firms step up investment in the power sector.

“We have already negotiated prices, we are only waiting for their financial closure," chairman and managing director K. Ravikumar told over phone.

The state-run company, which the market values at nearly $22 billion, is counting on private power firms to boost its order book as delays in bids and rising competition slow orders from the government, he said.

Bhel has orders on hand worth Rs1.3 trillion. This includes Rs15,000 crore signed this year, with the private sector contributing 90%.

It hopes to get Rs55,000 crore of orders in the current year to March 2010. This could rise by Rs10,000 crore if it gets part of a bulk equipment contract from NTPC Ltd, the country’s largest utility, expected to be awarded in January-March, Ravikumar said.

The company is expanding its capacity to meet rising demand and is also looking to new areas as competition from domestic and foreign players increases, he said.

A reviving market for initial public offerings (IPOs) has sparked a flurry of capital-raising by power firms this year, drawn by rising demand for electricity in a country that faces 12% shortfall during peak hours.

Last month, state-run hydropower generator NHPC Ltd raised $1.25 billion in an IPO, and in July private sector Adani Power Ltd collected $630 million. NTPC and Indiabulls Power Ltd are also waiting in the wings to launch share sales.

“The reduction in raw material costs has been lower because we are importing more finished assemblies, rather than making them here," Ravikumar said. “Despite this, we should get 30% profit growth."

Bhel mainly makes turbines, boilers and generators and is expanding total annual capacity to 15,000MW of equipment by March 2010 from 10,000MW. This will further rise to 20,000MW by December 2011.

It has spent Rs1,200 crore so far on the expansion and has earmarked another Rs1,200 crore this year.