Posted by:  arun2k on ( 23-Jul-08 09:56 ) | | | Price : BSE: Rs 1597.50 ( 6.04 % ), NSE: Rs. 1597.40 ( 6.05 % ) | July 23 (Bloomberg) -- Bharat Heavy Electricals Ltd., India's biggest power-equipment maker, plans to triple investment in plants supplying overseas manufacturers of nuclear reactors if the U.S. energy agreement is sealed.
``If the nuclear deal comes through we are quite confident there will be a lot of orders in this area and we don't want to be left out,'' Chairman and Managing Director K. Ravi Kumar said in an interview at his office in New Delhi, where the company is based. ``We will invest depending on the volume.''
Areva SA, the world's biggest maker of nuclear power plants, and General Electric Co. may win orders for reactors when India is allowed to import technology and fuel, Nuclear Power Corp. of India has said. The U.S. agreement cleared a hurdle last night when Prime Minister Manmohan Singh survived a parliamentary vote, allowing him to push forward negotiations on the deal.
State-controlled Bharat Heavy plans to spend 15 billion rupees ($351 million) in two years building plants to supply components for reactors of 1,600 megawatts capacity, Kumar said yesterday. Without the accord, Bharat Heavy will invest 5 billion rupees to build steam turbine generators and other components for 700 megawatt plants designed in India, he said.
$10 Billion Orders
The accord with the U.S. can generate more than $10 billion of orders for Indian companies, including Bharat Heavy and Larsen & Toubro Ltd., by 2012 if the planned projects are awarded, UBS AG analysts Suhas Harinarayanan and Pankaj Sharma wrote in a note to clients on July 10.
``We estimate Bharat Heavy's business potential at about 25- 30 percent of the contract size for the turbine generator sets and electrical equipment,'' the analysts said. They have a ``neutral'' rating on Bharat Heavy stock.
Bharat Heavy will set up a 50-50 venture with state-run Nuclear Power Corp. that will supply components for nuclear plants with a capacity to generate 700 megawatts, 1,000 megawatts and 1,600 megawatts of power, Kumar said. The company will also seek overseas partners to provide technology for these plants, he said, declining to name the companies.
The company aims to expand its nuclear power-plant business because of wider profit margins, Kumar said. The gross profit margins for such plants would be as much as 30 percent, compared with about 22 percent for thermal power plants, Kumar said.
Bharat Heavy has provided 80 percent of the equipment used by Nuclear Power Corp.'s installed capacity of 4,120 megawatts. In April, Bharat Heavy agreed to set up a venture to make nuclear plants that will seek technology to make steam turbine generators of 700 megawatts or more.
Areva, Westinghouse
Areva, General Electric, Toshiba Corp.'s Westinghouse Electric Co. and Russia's atomic energy agency Rosatom are among four manufacturers of reactors that would share $14 billion of orders from India when the U.S. agreement is signed, Nuclear Power Corp. said in August.
The agreement will allow India to generate as much as 40,000 megawatts of nuclear power by 2020, sufficient to light up four cities the size of New York, from 4,120 megawatts now. Demand for electricity in Asia's third-biggest economy during peak hours widened to 17 percent in the year ended March 31 from 14 percent a year earlier.
Singh was forced to seek a vote of confidence in the nation's lower house of parliament after his former communist allies withdrew support over the accord with the U.S. The Left parties have said the nuclear agreement will weaken India's ability to pursue an independent foreign policy.
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