Auto components major Bharat Forge is joining hands with top power generation company NTPC Ltd to set up a new greenfield manufacturing facility in the country. The joint venture will look at manufacturing power plant equipment, including turbines, components and accessories, through technological tie-ups with other manufacturers. A strategic partner may also be roped in later. This the two Companies would do either by reducing their existing stakes or by infusing fresh equity.
Once off the ground, the joint venture will be a fructification of power minister Sushil Kumar Shinde’s plans to diversify NTPC into equipment manufacturing. A power ministry official confirmed that Bharat Forge had written to Shinde on October 29, expressing interest to set up manufacturing facilities for manufacturing power plant equipment. To begin with, the manufacturing facility of NTPC and Bharat Forge will take up fabrication, casting of forgings and pipings for various industries. They will also meet the requirement for ‘balance of plant’. Balance of plant consists of the remaining systems, components, and structures that comprise a complete power plant. Once this company starts performing business satisfactorily, it will get into manufacturing power plant equipment.
To work out the details, Bharat Forge CMD Baba Kalyani met NTPC chairman T Shankaralingam on November 29. Sources said, an agreement would be signed shortly between NTPC and Bharat Forge to float the JV. It will be incorporated as a private limited company, with both NTPC and Bharat Forge as equal partners. The JV will take the ‘project-financing’ route for setting up a manufacturing unit on a non-recourse basis. The draft memorandum of understanding prepared by NTPC restricts the JV from taking up any renovation and modernisation of power plants in India and Saarc countries. However, if Bharat Forge has any objection, a special requirement will be incorporated in the MoU.
NTPC has recently signed a similar MoU with Bhel to form a 50:50 joint venture for engineering, procurement and construction activities. NTPC is India’s largest power producer with an operating capacity of 27,900 mw. A public listed company with a government holding of 89.5%, NTPC has around 20% of the country’s installed capacity and contributes 29% to power generation. NTPC plans to become a 75,000-mw-plus company by 2017 and is also in the process of setting up an exchange to trade electricity. About 15 % of the nation’s power output is expected to be traded through the exchange in about five years. Other state-run
Source: The Financial Express
6th December, 2007