To submit price bids for NTPC order by Feb-end: BGR Energy

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To submit price bids for NTPC order by Feb-end: BGR Energy

Chairman and managing director of BGR Energy, BG Raghupathy tells CNBC-TV18 that they are likely to submit bids for NTPC's order of 11 boiler tenders by the end of February.

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Chairman and managing director of BGR Energy , BG Raghupathy tells CNBC-TV18 that they are likely to submit bids for NTPC's order of 11 boiler tenders by the end of February.

This auction opened up after the Supreme Court last week ruled in favour of NTPC , overruling the High Court order with regard to the bid by Ansaldo.

Raghupathy goes on to say that only two companies will get the orders from NTPC post competitive bidding. "Currently there are only three players in the race, that is BHEL , L&T and BGR, but only two will get the orders," he said, adding that they will come to know if they have a chance at bagging the order once the price bids are open.

Below is an edited transcript of his interview with Mitali Mukherjee. Also watch the accompanying video.

Q: Could you just explain the potential impact of the Supreme Court ruling for your company and what it may mean in terms of potential order wins from NTPC?

A: This order concerns 11x660 megawatts boiler tender from NTPC. What was already finalized is 800 megawatts while we were L1 water turbine generators. The Supreme Court order means that there are only there players left out in the competition - BGR Energy, BHEL and L&T. These three companies have to compete.

L1 will get six boilers, L2 will get five boilers. In case BHEL is not L1, they will be treated as L2 and given five boilers in any case. So BHEL has achieved a five boilers order. L&T and BRG will be competing for the six boilers.

Q: Are you saying that this will involve putting in fresh bids for the three companies, because our understanding was that it now gets divided between three companies as they had been allotted L1-L2 status?

A: No. Three companies have to compete and only two will be given the order. Six boilers and five boilers is the competition. We have not yet submitted the price bid. We will be submitting it on the date fixed by NTPC, which is likely to be within this month. So we have to submit our fresh price bid.

Q: Once the fresh bid has been put in, how soon do you think before the entire process will be completed and you will know whether or not you stand as winner of these projects?

A: On the same day we will come to know; as soon as the price bids are open, we will come to know whether we stand a chance or not. Same is the case for Larsen and Toubro.

Q: Bidding has been quite aggressive in this space over the last couple of years actually. Are you confident that the bid that you put in will be profitable for your company?

A: The bidding has been competitive only for the 800 megawatts turbine generator. That is the first time competition was there, it has not been competitive for the last three years. We will be already having orders by this month and from NTPC for the turbine generator and from Rajasthan for the EPC which has boilers. So we have orders on hand.

Our priority certainly is execution - that is more important. When we are taking first time the boiler and turbine generator orders, we don't want to have too much of order book. We want to execute very smoothly. This will be participated in the tender.

Q: You have had a rough third quarter though and specifically on construction and EPC, your revenues are actually down. What could this potentially add to your order book if the deal comes through and over what period would you book it in terms of how many financial years?

A: In March-April we will be booking additional Rs 9,000 crore of orders. We already have about Rs 9,000 crore of orders in hand, so that would make Rs 18,000 crore of order.

The NTPC order value could be about Rs 9,000 crore additionally, so if we are successful, it could be Rs 18,000 crore plus Rs 9,000 crore. If we are not successful, it is only Rs 18,000 crore. But many other tenders are coming up. State government projects itself. The utilities of state government will be finalizing Rs 35,000 crore of projects in the next 12 months.