BGR Energy partners with Hitachi for power equipment

CHENNAI - To become an integrated power equipment maker, city-based BGR Energy Systems Friday inducted two companies of the Japanese Hitachi group as joint venture partners in two subsidiaries.

The Rs.3,069 crore turnover BGR Energy parted with 26 percent stakes in BGR Turbines Company to Hitachi Japan to design, manufacture, install and commission of supercritical steam turbines and generators for coal-fired power plants.

Similarly, BGR Energy offloaded 30 percent stake in BGR Boilers in favour of Hitachi’s German subsidiary Hitachi Power Europe GmbH to make supercritical steam generators.

“Both the projects will involve a total outlay of Rs.4,400 crore (turbine project Rs.3,000 crore and boiler project Rs.1,400 crore) and will be funded with a mix of equity and debt. BGR Energy will fund its portion of equity from its internal accruals,” Chairman and Managing Director B.G.Raghupathy told reporters here.

“The stakes are offloaded at par. And both the shareholders will bring the needed money jointly in the shareholding ratio as and when needed. The break even is expected to happen on the fourth year of operations,” he said.

Both the joint venture companies will have a capacity to make five units per annum of 660 MW, 800 MW and 1000 MW and would start production in 2012.

With the signing up of the joint venture agreements, BGR Energy has become the third Indian company after Bharat Heavy Electricals Ltd and Larsen and Toubro to offer all the major power generation equipments-boiler, turbine and generator.

The two companies together would generate around 3,000 new jobs.

BGR Energy officials told IANS that if there is a need to supply the equipment before 2012 then the demand would be catered to from Hitachi’s plants.

Raghupathy also confirmed to IANS that the technical agreement signed with Foster Wheeler earlier stands cancelled.

“Foster Wheeler was not interested in a joint venture. Further, having the boiler and turbine generator from a single party has its own advantages,” he told IANS.

According to company officials, BGR Energy wanted to eliminate such minor hitches while bidding for tenders.

Asked about the location of the two plants, Raghupathy said: “We have identified three locations along the Tamil Nadu coast and a final decision will be shortly taken. Each project will need around 250 acres -for the plant as well as for the employee housing.”

He said both the projects will be housed nearby if land is not available at one place.

Raghupathy said talks were on with some foreign companies for making circulating fluidised bed combustion (CFBC) boilers so as be able to supply the entire range boiler range.

Hitachi is third Japanese power equipment company that has entered the Indian market after Mitsubishi (with L&T) and Toshiba that has partnered with JSW Energy.

At the National Stock Exchange, BGR Energy’s share after opening at Rs.790 went up to Rs.813.0 and closed at Rs.801.