Bhel plans Rs 1,500-cr forgings joint venture

Bharat Heavy Electricals (Bhel), India’s biggest power-equipment maker, plans a Rs 1,500-crore ($327 million) joint venture company for forgings and castings to gain technology, Chairman and Managing Director K Ravi Kumar said.

The state-controlled equipment maker has received interest from as many as 15 companies, both local and overseas, Ravi Kumar told reporters in New Delhi today. The proportion of the equity stake to be offered hasn’t been decided, he said. Bhel is forming joint ventures, including one with the nation’s biggest utility NTPC and another with Nuclear Power Corp, to increase its capability to meet rising demand for power generation equipment and gain know-how.

“There is a short supply of forgings and castings and we don’t have the technology for higher tonnage,’’ Ravi Kumar said. “Supply chain management is the main reason for this. We want to source our material from this joint venture.’’

The joint venture, which will make forgings of more than 50 tonnes, will sell 40 per cent of its production to Bhel and the rest will be sold overseas, Ravi Kumar said. Bhel, whose equipment lights three of every five homes in India, expects to get more than Rs 50,000 crore of contracts in the current financial year ending March 31, 2009, Ravi Kumar said. The company won Rs 50,265 crore of orders in the year ended March 31.

The company expects profit and sales will increase more than 25 per cent this fiscal year as it expands factories to build generators and turbines, Ravi Kumar had said in an interview on July 22. It had Rs 95,000 crore of orders at the end of June.

State utility stakes

The equipment maker may spend about Rs 1,200 crore to own equity in three different utilities being set up by the state governments of Tamil Nadu, Karnataka and Gujarat, Ravi Kumar said.

The three state governments are setting up utilities that will use turbines with super-critical technology. Steam turbines based on super-critical technology use less energy and generate higher pressure for greater efficiency than traditional plants.