Powergear Ltd, a Bangalore-based electrical equipment manufacturer for energy sector, has entered into a joint venture (JV) with Spanish wind power firm Gestamp Wind Steel to manufacture wind towers near Chennai with an initial investment of Rs 150 crore.
The JV company would set up a 20 acres greenfield manufacturing facility at Sricity, a planned integrated business city 60 Km away from Chennai.
The company expects to start commercial production by the last quarter of the current fiscal year. The 60:40 JV firm - Gestamp Powergear Windsteel Ltd, in which Gestamp holds majority stakes, is targeting to manufacture around 400 towers in three years to clock in a sales of around Rs 500 in first three years of operation, according to a senior official from Powergear.
“The plant will be fully operational by three years and we are expecting a sales of Rs 150 crore revenue in the first year of operation,” said X Durairaj, chairman, Powergear Ltd. He said that the JV would manufacture 130 towers in the first year of operation, expand it to 250-260 towers in the second year and to around 350 to 400 towers by the third year.
Gestamp Wind Steel would provide technology apart from investment, while Powergear would put in its manufacturing capabilities to the operations of the JV, he added. It would supply towers of 1.6 MW, 2.5 MW and 3MW for the customers.
Javier Ignacio Imaz Rubalcaba, CEO, Gestamp Wind Steel, said that the company was convinced on the market potential for wind power energy in India and had been looking for right partner to start a joint operation.
The annual wind power market in India is around 2200 MW, at present and is expected to grow to 5000 MW per annum by 2015, according to World Institute of Sustainable Energy.
The cumulative installed capacity in the country is currently at 13 Giga Watts and is expected to reach 64 GW by 2020, according to reports.
Powergear Ltd is involved in the design, fabrication, and installation of electrical equipments catering to international and domestic customers. It has exports to over 21 countries including USA, Japan, Spain, Argentina, Mexico, Saudi Arabia, Abudabi, Oman, Malaysia, Italy, China and Sri Lanka.
Gestamp Wind Steel is a part of Gestamp Corporation, which is focused on steel, automotive components and renewable energy industries. Its wholly owned subsidiary, Gestamp Automotive India and solar business firm Gestamp Solar, are executing various projects in India at present.
Meanwhile, Powergear Ltd is planning to expand its capacity for electrical equipments production to more than double in next three years by investing around Rs 50 crore. The company is investing Rs 10 crore for expansion of existing facilities and would set up a greenfield manufacturing facility in India, said X Durairaj, chairman, Powergear Ltd.
“We are planning to invest around Rs 30-40 crore for a greenfield project in Tamil Nadu in next three years. We will look at raising funds through an IPO (Initial Public Offering) or private equity for the proposed investment,” he told Business Standard.
The decision on fund raising would be finalised once its JV with Gestamp is established by end of 2011.
The Rs 140 crore company has four manufacturing facilities, one in Chennai, two in Bangalore and one in Hindpur, near Bangalore.
The current capacity for various products including generator terminal enclosures, generator auxiliary compartment panels, vacuum circuit breakers, outdoor oil immersed instrument transformers, dry type instrument transformers and disconnect switches, is sufficient to supply global energy sector to manufacture 20,000 MW per annum.
With the capacity expansion and establishment of new plant, the company expects to cater energy generating industry to manufacture 50,000 MW.
The capacity expansion would support the company to increase its presence in India.
“At present, almost 75 per cent of our products are exported while only 25 per cent caters to Indian market. We are looking at a tremendous growth in India and the expansion would support us to cater the needs of the domestic market,” said Durairaj.
