NTPC-BHEL Power Projects (P) Ltd, a joint venture between India’s largest power generator, NTPC, and power equipment manufacturing major, BHEL, is gearing to take on similar JVs such as L&T-Mitsubishi for boilers and Bharat Forge-Alstom for turbine generators. In an interview with Sanjay Jog, the company’s chairman and managing director, C P Singh, spells out the strategy. Edited excerpts:
What is the business plan?
It is proposed to invest Rs 6,000 crore in five years to fully establish the manufacturing plant. We will have capacity to produce power generation equipment of 5,000 Mw per year by 2014-15. The manufacturing facility for balance of plant (BoP), especially of coal handling and ash handling units, will be ready by 2013.
The company has committed Rs 200 crore by the end of March 31, 2011, to start construction activity in the Rs 6,000-crore power equipment manufacturing facility at Mannavaram, near Tirupati in Chittoor district of AP. At least 150 professionals would be recruited by NBPPL; ground work has already begun at the 750-acre site.
NBPPL is also looking at securing contracts for undertaking project management and quality control inspection work on behalf of the developers.
What is the status of work on the AP manufacturing facility?
Under the first phase, a facility for manufacturing BoP equipment will be set up. This would be commissioned by March 2013. The facility for manufacturing main power plant equipment such as boilers, turbines, generators will be commissioned by March 2015. The company will generate direct employment for 6,000 persons and indirect employment for 25,000 people.
The company is building expertise in project management engineering and drawing on necessary skills from both NTPC and BHEL. The huge demand for power equipment and urgent need for beefing installed capacity within the country require more manufacturing facilities.
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What is the order book status?
We are executing BoP packages, including civil and structural works for the100-Mw Namrup Power Station in Assam and BoP for the 726-Mw combined cycle power plant at Palatana of ONGC Tripura Power Corporation Ltd. NBPPL will take up execution of 1x500 Mw Singrauli TPS on EPC basis, in addition to a 600 Mw TPS at Rayalaseema for Apgenco. The present order book of approximately Rs 450 crore is likely to touch Rs 7,000 crore by the end of 2010-11.
We have targeted turnover of Rs 10,000 crore by 2014-15, with an estimated profit of Rs 630 crore.
What’s your fund raising plan?
The authorised share capital is Rs 300 crore. An amount of Rs 100 crore each was sanctioned by the promoter companies to start the operations. The total funding requirement of Rs 6,000 crore will be managed through a debt-equity ratio of 1:1. This money has to be spent in a five-year frame. The promoter companies have adequate resources to support the funding requirement.
What is the strategy for taking on the various other JVs formed by Indian and foreign players in this segment? The market is so big, there is need of many capable players to establish capacity for manufacture of power equipment.
NBPPL is created to leverage the core strengths of the respective promoter companies and supplement their EPC and equipment manufacturing capacities. Competition is always good for customer and country. We are laying special emphasis on customer focus, on a zeal to excel and ensuring speed of response.