Engineering and construction major Larsen & Toubro (L&T) plans to restructure its joint venture with Japan’s Mitsubishi Heavy Industries, as it prepares to re-bid for the NTPC contract for bulk supply of supercritical boilers worth about Rs 9,000-11,000 crore, in which they were earlier disqualified on technical grounds. NTPC re-tendered the contract today.
L&T plans to transfer the equity of L&T in their joint ventures (JVs) with Mitsubishi Heavy Industries (MHI) into L&T Power through a book transfer, if clauses for the re-tender remain the same, company executives told Business Standard.
Bids from L&T Power, a 100 percent subsidiary of L&T, were disqualified this week on technical grounds that the firm lacked experience and expertise to supply supercritical boilers and lacked equity partnerships in manufacturing theses. L&T’s pair of three-year old JVs with the Japanese company — L&T MHI Boilers Pvt Ltd and L&T-MHI Turbine Generators Pvt Ltd — are between L&T and MHI, and not between L&T Power and MHI. “If L&T had bid instead of L&T Power, they may not have raised this issue,” said an L&T executive, who wished not to be quoted.
NTPC re-tendered since after L&T Power’s disqualification, Bharat Heavy Electricals Ltd was the only one in the fray. Though the retendering would delay the projects by at least three months, it is expected that BGR-Hitachi and Ansaldo Caldaie Boilers might also take part. The two consortia were unable to meet the qualification criteria to bid for the tender earlier, said an executive privy to the process. Besides formalising partnerships, the tender conditions also required the bidders to have already acquired around 70 per cent of the land for a manufacturing facility.
Ansaldo Caldaie Boilers, a JV between Italian company Ansaldo—which is 50 per cent owned by Gammon India—and GB Engineering at Trichy, is in the initial stages of setting up the plant.
Another JV likely to bid is between Pune-based Thermax and Babcock & Wilcox Power Generation of the US. This JV deal was signed only in March. “We will bid, depending on the new clauses that NTPC will publish in the new tendering norms. As of now, we have identified land and can acquire it even before October, if required,” said M S Unnikrishnan, managing director of Thermax.
NTPC initially floated the tender in last October. The last date for bids was January 28. Only BHEL and L&T bid for boilers, as other companies planning to set up Jvs were either in the process of setting up the units or in the construction stage. NTPC’s orders are for 11 boilers, nine for its own projects and two for Damodar Valley Corporation.
Bharat Forge, which is setting up a JV with Alstom of France at Mundra in Gujarat, had started construction only in December last year. Toshiba JSW Turbine and Generator Pvt Ltd, a JV between Toshiba Corporation and Sajjan Jindal’s JSW Group, is planning to commission its facilities near Chennai by January 2011.
L&T Power is investing close to Rs 3,600 crore in power generation and related sectors at Hazira in Gujarat. It has planned to augment its existing manufacturing capacity of steam turbine generators and boiler-turbines-generators (BTG) to 6,000 Mw from the current 4,000 Mw in two years. Investments include Rs 750 crore in boilers, Rs 1,400 crore in forgings, Rs 1,050 crore in turbines and Rs 120 crore each in foundry and piping facilities.
Source : Business Standard. 25/06/10