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NTPC-Bhel JV To Invest Rs 6,000 cr In New Unit To Set Up A Power Equipment Manufacturing Facility

By ugesh sarkar, Section Electricity
Posted on Tue Jul 08, 2008 at 03:22:21 AM EST

NTPC-BHEL Power Projects (NBPPL), a 50:50 JV between NTPC and BHEL, will invest Rs 6,000 crore to set up a power equipment manufacturing facility that will churn out boilers and turbines equipped to charge up 5,000 MW of greenfield thermal capacity by calendar 2013. This was announced in Kolkata by Union minister of state for power and commerce Jairam Ramesh on Sunday.

"We've readied NBPPL's business plan and it will be placed for discussions soon. NBPPL will undertake three broad categories of business and it will be taken up in three phases," said Mr Ramesh.

Elaborating, he said: "In the first phase, the company will vie for engineering procurement and construction jobs for power plants in India and abroad. The second phase will involve manufacturing a critical balance of plant equipment for power units and in the final phase, it will set up a power equipment manufacturing plant.

The plant will have a capacity to manufacture critical components boilers and turbines for power plants with an annual capacity of 5,000 mw by 2013," said K Ravi Kumar, CMD, BHEL. The location of the plant, however, has not yet been finalised.

The company has been incorporated in Noida with an initial equity base of Rs 5 crore and a CEO will be appointed soon. The search committee under the department of heavy industries has been entrusted with the task, but the CEO will either be nominated by BHEL or NTPC.

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On ways to fund the capex for the company, Mr Ramesh said: "The Rs 6,000 crore investment plan is likely to be funded on a 70:30 debt equity ratio. Details are being worked out."

If a 70:30 debt equity ratio is considered, promoters of NBPPL -- BHEL and NTPC -- will have to collectively pump in nearly Rs 1,800 crore. Given the holding pattern, where each promoter holds 50%, BHEL and NTPC may have to each pump in Rs 900 crore of equity into the company. The balance Rs 4,200 crore will be mobilised as debt.

"Given the large capacity addition plan in the country during the 11th and 12th Plans, there's an urgent need to expand power equipment manufacturing capability and strengthen related EPC activities as well as balance of plant," said Mr Ramesh.

Interestingly, BHEL is targeting a gross sales of Rs 25,000 crore in 2008-09 while gross margin has been targeted at Rs 5,724 crore. Further, a stretch turnover target of Rs 27,000 crore has been fixed under 'Excellent' rating.

Source: Debjoy Sengupta From ET Bureau 08/July/2008

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