BSE-listed BGR Energy Systems Limited has downscaled its proposed investment for setting up a boiler and turbine plant in Tamil Nadu by 20 per cent.
The company had, in 2010, entered into an MoU with Japan's Hitachi Limited and its subsidiary Hitachi Power Europe GmbH, Germany, to set up boiler and turbine manufacturing facilities at a cost of Rs 4,400 crore.
Easwar Kumar, chief financial officer BGR, said, “We had a re-look at the project cost. It would now be close to Rs 3,500 crore for both the facilities,” Of the total investment, the boiler project will attract an investment of around Rs 1,200 crore and the turbine facility Rs 2,300 crore, he said addressing analysts.
After signing the MoU in 2010, company’s chairman and managing director BG Raghupathy had said the plant would go on steam by 2012 and have a capacity to manufacture five units of 660 Mw, 800 Mw and 1000 Mw. Construction of the facility, however, is yet to commence.
“Land acquisition is almost complete and we are awaiting construction permits. We expect the construction to start in the next two months. The primary machinery ordering has also been done,” Kumar said.
On the funding for both the projects, he said it would be funded through a debt-equity ratio of 70:30. The total equity required is between Rs 750 crore to Rs 800 crore and the company's contribution would be about Rs 500 crore, he added.
It has already brought in Rs 250 crore as on March 2012. Another Rs 250 crore will be infused in the current year, and the remaining balance next year. The debt part will be taken care of in the later part of the year, Kumar said.
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According to A Swaminathan, director (marketing and sales) of BGR, the second quarter revenues had been downgraded since the expected orders from NTPC Limited were to be delayed and the orders were yet to come in for turbine, which the company is expecting during the next quarter. Besides, other projects, including in Rajasthan has been deferred.
For the next two years, the company expects its top line to grow 10-15 per cent over the previous year, he said.