X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Power equipments: Some hope at last? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jun 5, 2008

    Power equipments: Some hope at last?

    As was reported recently, engineering and construction major, L&T has outbid power equipment heavyweight BHEL for Andhra Pradesh Generation Company's (APGenco) Krishnapatnam power project. The company has put in a bid of around Rs 15 bn for supplying turbine generator set to the 1,600 MW plant (2 units of 800 MW each) whereas BHEL's bid was around Rs 20 bn. The total cost of the project is Rs 84 bn (Rs 53 m per MW). The tender is for supply of turbine and generator set for the supercritical thermal power project, which was planned to be the first supercritical thermal project to be commissioned in India.

    Incidentally, APGenco had invited bids last year for which BHEL was the sole bidder and none of the other players showed any interest due to capacity constraints. Subsequently, the former cancelled the bidding process on the ground that it might end up paying a higher price to the latter. The company decided to go for re- tendering. This time, it decided to issue three separate tenders for supply of the boiler, turbine and balance-of-the plant (BoP, which includes all the engineering and supply of subsystems - excluding the turbine and generator - required for efficient operation of a power plant). This was in departure from its earlier strategy to award a turnkey contract to a single vendor for the project. The bids for turbine generator set were submitted on Tuesday, where L&T emerged as the winner.

    India's first supercritical project
    The Krishnapatnam project would be the first contract given to a non-BHEL domestic manufacturing company. We believe that it is a very significant development, which would kick-start L&T's power equipment manufacturing programme. Also, in a scenario where almost all the big power equipment players are booked for next 3-4 years, having one more manufacturer will help to keep the government's power capacity addition programme on track.

    Why equipment supplies shortage?
    Companies like Siemens are booked till FY12. BHEL's order book at the end of March 2008 was almost 3.5 times its full year FY08 sales, the highest ever. Also international suppliers like Dongfang and Shanghai Electric are booked for the next 2-3 years. They are also seeing the highest order book levels ever. There appears to be worldwide shortage in the generation equipment capacity. The demand for power equipment in China, India and other parts of Asia has raised the total demand for new equipments to about 120,000 MW per year. Also there is a replacement demand of about 40,000 to 50,000 MW per year. With the global capacity of power equipments at around 180,000 MW, manufacturers are likely to find their order books full at least in the medium-term.

    As far as India is concerned, over the past two years, there have been talks of promoting one more equipment manufacturer besides BHEL, and L&T was chosen to be the one. The company is coming up with generation equipment capacity of 3,000 MW per year to start with, and has formed a joint venture with Mitsubishi Heavy Industries (Japan) for manufacturing of supercritical generation equipments (boilers, steam turbines and generators).

    With BHEL also expanding capacity to 15,000 MW per year by 2009, there is hope that the country is likely to see some acceleration in the generation capacity addition. This will be a big positive for the overall power scenario.

     

     

    Equitymaster requests your view! Post a comment on "Power equipments: Some hope at last?". Click here!

      
     

    More Views on News

    BHEL: Margins Dip into the Negative (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The company also saw order inflows of Rs 18 billion during the quarter, which was a massive 41% YoY lower than the previous year's quarter.

    Cummins Ltd: Domestic Revenues the Saving Grace (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The domestic economy continues to grow largely in areas which are positively impacted through continuing government investments in infrastructure.

    ABB: Large Orders Remain Muted (Quarterly Results Update - Detailed)

    Aug 2, 2017

    Decisions on government initiatives and private investments were stalled in anticipation of upcoming tax restructure.

    L&T: Amidst a Challenging Business Environment (Quarterly Results Update - Detailed)

    Aug 1, 2017

    Bank credit to industry remained muted and investment momentum was driven mostly by public sector spending.

    L&T: Private Sector Capex Remains in a Tizzy (Quarterly Results Update - Detailed)

    Jul 24, 2017

    Vast majority of private players remain more concerned with debt payback rather than starting new projects.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE CAPITAL GOODS


    Aug 18, 2017 (Close)

    S&P BSE CAPITAL GOODS 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS