Key takeaways of the meet

The company has emerged as the L1 for all nine units of super critical steam generators in 9X800 MW bulk tendering of NTPC, competing against other qualifiers i.e. BHEL, L&T Mitsubishi, Bharat Forge-Alstom and JSW Toshiba. But as per the tender conditions NTPC will award either five or four units of supercritical steam turbines generators to the L1 bidder depending on the two projects the L1 chooses.

Of the four sites for which the bulk tender is called by NTPC are 2X800 MW Lara STPS in Chattisgarh, 2X800 MW Darlipali STPS in Orissa, 2X800 MW Gajmara STPS and 3X800 MW Kudgi STPS. The choice of sites to be made in consultation with NTPC and the company is likely to go for Kudgi and Gajmara STPS projects as they have better connectivity to sea ports. So the company will end up supplying 5 units and the balance will be equally shared by JSW Toshiba, the L2 and BHEL, being public sector company as required by the Govt norms.

Normally NTPC will release LoA within 3 months time of opening of price bid and hence the company expects Letter of Award in another 1-3 months.

The value of contract for this STG island project is about Rs 3600 crore. The per MW cost of turbine order works out to Rs 94 lakh and it may go up to Rs 1 crore per MW after factoring in other adjustment factors.

Of the total order value about 45% is of turbine balance of plant and balance is for supply of five numbers of turbine and generators. Commissioning of first turbine has to be made with in 42 months from date of LoA and next turbine would be two months thereafter.

The contract provides for price variation clause and foreign exchange variation clause.

Since the first shop of JV turbine manufacturing unit is expected to commence operation only by Jan 2013, majority of the turbines for NTPC contracts are expected to come only from Hitachi Japan. First two turbines are expected to be completely imported from Hitachi, Japan but for the latter ones a mix of imports from Hitachi, Japan and components manufactured by JV company i.e. BGR Turbines Company will be used. BGR energy is expected to contribute with systems manufactured by it along with the turbine island BoP part.

Of the 45% of turbine island BoP, the bought out component will be about 20%. The bought out items will be such as pumps etc.

Contribution to revenue by this large NTPC order is expected only by end of FY13 or 20 months from date of LoA.

Current Demand supply scenario is the reason for aggressive bidding. If the demand supply scenario improves with order for every one the price might get stabilised.

The turbine facility to have a workshop spread over 12 lakh sft and boiler facility about 7 lakh sft. The capacity of the JV companies for boiler and turbine will be about 5000 MW each. The cost of boiler unit is Rs 1400 crore and that of turbine unit is Rs 3000 crore. As of now the order has been placed for long lead machines and site levelling has commenced on the land acquired. The acquisition of balance land required is under progress.

The company expects the RJVUNL order to materialize in Oct 2011. As far as the Orissa order is concerned the price bids are expected to be submitted by Oct 2011.

Order book excluding the bulk NTPC order is Rs 6500 crore and including that it swells little over Rs 10000 crore.