State-owned power company, NTPC Ltd and auto components major Bharat Forge have decided to jointly invest Rs 3,000 crore towards setting up of a new greenfield manufacturing facility for supplying plant and machinery for power projects in India.
A Memorandum of Understanding (MoU) for floating a joint venture company was executed between CMD of Bharat Forge, Baba Kalyani and CMD, NTPC, T Sankaralingam. FE was the first to report about this development on December 6, 2007.
To begin with, the joint venture — 49% of which will be owned by NTPC — will manufacture casting of forgings, fabrication work and pipings for power projects (also called the balance of plant works), Sankaralingam told reporters at a press meet.
Company officials revealed that at a later stage, the joint venture could also get into manufacturing of complete power plant equipment, including turbines, components and accessories, through appropriate technological tie-ups with other manufacturers. A strategic partner may also be roped in later. This would be done by NTPC and BHEL by either reducing their existing stakes or by infusing fresh equity. The proposed JV would start operations within 15 months of incorporation, he said, adding that the MoU would not impact the company’s existing agreement with BHEL, which is also for entering the equipment manufacturing space. ?There is no exclusive deal (with BHEL). We are two independent companies and are at a liberty to produce any equipment,? he added.
NTPC and BHEL have signed a JV agreement to jointly undertake EPC projects in India and abroad. Recently, the MoU was modified to include a clause that besides undertaking EPC projects, the two companies shall also manufacture and supply equipment for power plants and other infrastructure projects in India and abroad. Both BHEL and NTPC would have an equal equity participation in the JV. Sankaralingam said once formed, JV with Bharat Forge would also bid for tenders. ?Our arrangements with BHEL and Bharat Forge will result in two separate companies. Both will compete and bid for orders,? he said. After a slippage in meeting 10th plan target, the government has been promoting the idea of having more players for equipment manufacturing, being dominated by BHEL.