Dongfang to float Indian subsidiary

Chinese power equipment maker has orders for 3,000 mw, hopes to double that in the new year.

Leveraging on its cost-competitiveness, China's state-owned power equipment major, Dongfang Electric Corporation (DEC), is increasingly making its presence felt in India's growing power sector.

The company has already bagged orders worth 3,000 mw and is looking to add another 3,000 mw by 2008-end. An Indian subsidiary is also in the pipeline.

"India is a very important market for us. We want to catch up since we entered the country very late," said Wen Ya, Dongfang's chief representative in India.

While Dongfang has been a major player in the international market for close to three decades, it came to India only in 2004.

The company is working on several projects, including two 600 mw and 300 mw projects of the West Bengal Power Development Corporation at Sagardighi and Durgapur respectively.

Besides, Dongfang has also bagged four Lanco projects - a 600 mw project at Amarkantak in UP, a 1,000 mw project at Nagarjuna, Andhra Pradesh, a 70 mw hydro-power project in Himachal Pradesh and a 600 mw thermal power project at Korba, Chattisgarh.

The Indian market has so far been fed largely by local giant Bharat Heavy Electricals (BHEL). The two companies - BHEL and Dongfang - are, however, as different as chalk and cheese.

While BHEL has an installed capacity of 7,500 mw capacity, which it plans to ramp up to 10,000 mw by 2009, Dongfang's overall capacity is a whopping 30,000 mw.

The play in the power-capacity spectrum of the two companies also differs. BHEL specialises in capacities ranging from 200 to 800 mw, while the Chinese manufacturer specialises in the 300 mw to 1,000 mw range (300 mw, 350 mw, 600 mw, 660 mw and 1,000 mw), thereby giving it more customisation breadth for its customers.

As with other cost-competitive Chinese products, the quality of Dongfang's products too, is often suspect.

Brushing off the perceptions of poor quality, Ya said, "We offer competitive pricing, not low pricing. For turbines, we associate with Hitachi and for boilers, we have a tie up with Alstom (CFBC technology for special boilers) "" companies that are internationally accepted. This shows that our technology is advanced and our quality is good."

He also said that the number of projects that Dongfang has worldwide would not be possible of the quality was bad. "Moreover, the average life of boiler, turbine and generator (BTG) is at least 30 years, while we have been in India for only four years. How can people judge us in such a short time?" questioned Ya.

Dongfang is yet to make its first sale to NTPC "" the country's largest power producer. Explaining the reason for that, Ya said: "Currently, we don't have the manpower to take on big projects. Being a foreign company, it is tough to get business visas for our employees and a lot of documentation has to be done. Also, our hands are full as there is a lot of demand from the Chinese market."

The company is also in the process of setting up a service center in Kolkata, the land for which has already been identified. The service center is expected to be completed by mid 2009.