The Hindu Business Line : Bharat Forge seeks Centre’s help in bulk bidding for supercritical equipment

Mumbai, Dec. 11 The Rs 4,700-crore Bharat Forge, which recently announced its entry into the power equipment arena with Alstom of Europe, is seeking the Centre’s intervention to ensure that the process of bulk bidding for supercritical equipment is not derailed.

This is in response to suggestions made by a section of local players that only companies with a 51 per cent Indian shareholding be allowed to participate in the bidding process. One of them was recently quoted in the media saying that this would “otherwise only encourage imports in the country as opposed to actual manufacturing here”.

To this, Bharat Forge has retorted in a recent letter to the Government that “not only are such suggestions reflective of extremely narrow and non-competitive dispensation but importantly, they cut at the very root of the decision to induct latest technology at competitive prices in the Indian power sector”.

“It needs to be appreciated that technology transfer and level of indigenisation are not directly proportional to the ownership pattern. In fact, these are independent issues,” it adds.

Apart from Bharat Forge, companies keen on entering the supercritical power equipment arena include Larsen & Toubro-Mitsubishi Heavy Industries, Jindal Steel-Toshiba and Bharat Heavy Electricals-Siemens. L&T is the only Indian player with a 51 per cent stake.

Sore point

What has clearly emerged as a sore point to Bharat Forge is the fact that the Ministry of Power and the Central Electricity Authority (CEA) already decided to implement an aggressive phased manufacturing programme (PMP) as part of the bulk tender requirement where the issue of majority Indian shareholding was nowhere in the picture.

“With PMP, no bidder will be able to match the prevailing prices unless manufacturing substantially happens in India. In this regard, defined equity stake of the Indian partner has no relevance or compelling influence on technology transfer or level of indigenisation,” the company says. It goes on to caution that a direct consequence of this suggestion would be elimination of new players who are making large investments.

The opposition camp has also insisted that bidders be in actual possession of the land before they buy the documents and should have also ordered all the machinery before bidding.

To this, Bharat Forge argues that land procurement for industrial purposes has become an “immensely challenging task” in recent times. All the new joint ventures are making “serious efforts” to get this done and that “such short-sighted suggestions can only lead to elimination of healthy competition from the market”.

Issue of machinery

Similarly, on the issue of machinery, the company states that this is only a “logical consequence” of new entrants agreeing to PMP. It goes on to say that setting up an ultra-modern plant needs involvement of transcontinental machine tool manufacturers.

According to Bharat Forge, the CEA and National Thermal Power Corporation had already concurred that a “predetermined schedule” of installing plant and machinery would be an acceptable prerequisite for bidding. Hence, the insistence on ordering all equipment by a section of industry would “defeat the objective of increasing competition”.

It has reiterated that with estimated capacity needs of about 25,000 MW annually and available equipment capacity of barely 8,000 MW, there is an “unavoidable need of 3-4 large manufacturers” to ensure timely capacity expansion.

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