BSE-listed BGR Energy Systems Ltd has said that it had downscaled its proposed investment to set up a boiler and turbine plant by around 20 per cent to Rs 3,500 crore. The company had signed memoranda of understanding (MoUs) in 2010 with Hitachi Ltd, Japan and Hitachi Power Europe GmbH, Germany, a Hitachi subsidiary, to set up boiler and turbine manufacturing facilities in Tamil Nadu.
Easwar Kumar, chief financial officer of the company said, “We had a re-look at the project cost, it would be now close to Rs 3,500 crore for both boiler and turbine together.” When the company signed MoU in 2010, it had announced an investment of around Rs 4,400 crore in both the projects.
“The investment was scaled down after the company did a re-engineering of the building requirement. For the plant and machinery the company could have gone for bigger set of machineries, but is now going for two or three numbers. Plus the residential colony, which will be taken up at the later stage”, said Kumar, while addressing analysts.
He added that of the total investment, the boiler project would attract an investment of around Rs 1,200 crore and turbine would attract Rs 2,300 crore.
After signing the MoUs in 2010, the company’s CMD B G Raghupathy had said that the plant would go on steam by 2012 and would have a capacity to manufacture five units a year of 660 MW, 800 MW and 1000 MW. However, it is yet to commence construction.
“Land acquisition is almost complete, we are waiting for construction permits. We should expect the construction to start in the next two months time. The primary machine ordering has been done,” said Kumar.
Commenting about the funding for both the projects, he said, they will funded through debt:equity in the 70:30 ratio. The total equity needed is about Rs 750-800 crore and our contribution for 74 per cent is about Rs 500 crore, said Kumar.
The company has already pumped in Rs 250 crore as at March 2012, and another Rs 250 crore will be infused in the current year and the balance in the next year. Debt should be in the later part of the year or in the last quarter. So, in initiallu, it would be more of the equity that would be invested, he added.
On the company’s outlook A Swaminathan, Director, Marketing & Sales of the company said that the second quarter revenue has been downgraded since the expected NTPC orders to be delayed and the orders are yet to come in for turbine which the company expecting during the next quarter. Besides, other projects like Rajasthan project also got the deferred.
For the next two years, the company expects its topline will grow by 10-15 per cent over the previous years, said Swaminathan.
BGR Energy Systems Ltd is a Chennai-based company which engaged in supplying systems and equipment and turnkey engineering project contracting.
