Bharat Forge-NTPC to ink tech deals for power components

The Bharat Forge-NTPC combine will by July sign technology transfer agreements or joint ventures with overseas companies for manufacturing pumps and valves and large castings for power plants, said Sunil Chaturvedi, executive director, Bharat Forge.
He did not reveal the names of the prospective partners as discussions are still on.

These new ventures will by under the JV between Bharat Forge and NTPC, formed in 2008 to manufacture components for power plants.

“We are in different stages of dialogues with foreign companies for technology transfer or a joint venture to manufacture pumps and valves and large castings for turbines. We should conclude that by the middle of next month,” Chaturvedi told DNA Money on Saturday.

He added that the new ventures will not lead to dilution of equity of either Bharat Forge or NTPC in the main JV, in which the former holds 51% and the latter the rest.

“If it’s going to be a JV instead of a technology transfer agreement, we would like to hold a majority,” Chaturvedi noted.
Other than pumps and valves and castings, the Bharat Forge-NTPC JV plans to make pipes and also have complete piping solutions including the engineering of pipes.

“Currently, for piping solutions one has to deal with half a dozen companies but we want to provide the entire range of services,” he said.

The JV has already identified 100 acres at Solapur to make all products but pumps and valves, for which a plant could come up nearby.

All the facilities are expected to be commissioned in four years and the total investment will be Rs900-1000 crore, according to Chaturvedi. “But Bharat Forge’s equity contribution will only be Rs50-60 crore since there is NTPC and there could be other JVs (under Bharat Forge-NTPC),” he added.

Bharat Forge also has two other JVs with French major Alstom SA, one to make turbine generators and the other to make components like condensers and heaters for turbines. The turbine JV late last year bagged an order to supply five turbines of 660 mw to NTPC.

A May 24 report by IDFC Securities said that though these businesses will generate revenues only after 2012-13, there is merit in the company’s approach. “Through its various JVs and entry into EPC business, Bharat Forge is making its presence felt across the power business value chain,” Bhushan Gajaria wrote in the report.

Bharat Forge’s non-auto business, which comprises largely of power equipment & components and transportation, including railways, aviation and marine products, grew 90% last fiscal to contribute 37% to the company’s standalone topline of Rs2,950 crore. In 2009-10, it was 30%.