With NTPC order, BGR Energy's order book swells to Rs 10,500 crore

BGR Energy has emerged the best bidder in the tender floated by NTPC for the supply of turbine-generators for its nine supercritical thermal power projects. As the best bidder, BGR will get order for five out of the nine. The value of the order is estimated to be around Rs 3,600 crore.

With this, BGR Energy's order book today stands at Rs 10,500 crore, the company's Chairman, Mr B.G. Raghupathy, said at a press conference here today.

This order is significant in two ways. First, it is BGR's first order in the ‘boiler, turbine-generator' space. These equipments are the core of a power plant.

The Rs 4,763-crore BGR Energy has been a ‘balance of plant' company, supplying equipments such as coal handling and ash handling plants. Only recently did BGR enter the ‘BTG' space, in collaboration with (the German arm of) Hitachi, Japan.

Incidentally, the Korean power equipment major Doosan has emerged the best bidder for the boilers for the same projects and is expected to be given orders for the supply of five boilers.

Mr Raghupathy said that the first of the turbines would be commissioned in 42 months from the date of the formal receipt of the order. Revenue recognition is expected to start from around the 20{+t}{+h} month.

BGR is putting up two projects, for producing boilers and turbine-generators, near Chennai, in collaboration with Hitachi, with an investment of Rs 4,400 crore. However, most of the equipment for the NTPC order will come from Hitachi, Japan, because the Chennai plant would not be ready in time.

Yen fluctuation is not a problem because NTPC will pay BGR in US dollars and BGR will pay Hitachi in the same currency.

BHEL's position

Second, BGR and Doosan emerging best bidder is seen as a “wake-up call” for BHEL, the well-entrenched public sector major, which is the market leader in India. That this order was won against competition from BHEL is of note. BHEL has come pretty low in the order of best bids, but, under the tender conditions, it will still get orders for at least two turbines, provided it matches the price quoted by the second best bidder.

Incidentally, BGR's winning price quotation is Rs 94 lakh per MW, which could rise to a little over Rs 1 crore after “certain adjustments”.

On the NSE today, BGR's share fell by Rs 7.15 to Rs 360.25 (or 1.95 per cent), after rising by around Rs 45 on Thursday, when the order win was first announced.

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