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BHEL with new Partners , livemint.com

zyakaira — Thu, 03 Sep 2009 07:51:05 +0000

zyakaira notes: BHELs another JV with NTPC is in hot water because of some Intellectual Property concerns. Their going public with a stake sale will definitely help their plans get to an on ground reality. However, I believe Hydro power is not the way forward despite some of its advantages and all UMPPs are thermal – which also is among BHEL supplied goods, and their IPO vluation is unlikely to suffer for that. However at a valuation of 60000 crores ( ballpark based on current sales and some drop in market share – BHE remains an only provider in some underdeveloped markets) or $ 12 billion ( less than half of the Indian Banks’ investment in cash mutual funds in June July and August!)

From Livemint: State-owned Bharat Heavy Electricals Ltd (Bhel) will partner private construction firms to build overseas hydropower projects and is in talks with companies including Patel Engineering Ltd. “We are looking at getting EPC (engineering, procurement and construction) contracts overseas through this approach,” K. Ravi Kumar, chairman and managing director, Bhel, said. “While we will take care of the electro-mechanical work, the civil work will be done by our selected partner.”

“We have a tie-up with Bhel in India to execute projects in Andhra Pradesh on a similar model. It will be mutually beneficial to both the companies,” said Ashwin Parmar, deputy director, business development, Patel Engineering. For starters, India’s largest power equipment maker is eyeing a $250 million (Rs1,198 crore) contract to build a 72MW project in Katande in the Democratic Republic of Congo. Civil construction usually comprises 60% of the cost of a hydroelectric power plant and such a partnership would help Bhel share the project risk.

Hydropower projects are more complex to build and need specialized technology and design than thermal power plants. “Partnering with a contractor who has done civil work for a hydro project will help Bhel in the pre-qualification stage,” said Girish Solanki, a Mumbai-based research analyst at Angel Broking Ltd.

“There is an immense opportunity in Africa to tap as there is a power shortage there.” “This will be the first of the three project orders we are looking at in Congo. There are a few Indian firms that have shown interest in partnering with us, including Patel Engineering, for the Katande project,” said a Bhel executive who declined being named. “The Congo government also wants us to take up the 70MW Semlika project and partner in the Inga dam project.” Other companies that work on hydroelectric projects in India include Jaiprakash Associates Ltd, Hindustan Construction Co. Ltd and Gammon India Ltd.

Bhel is looking abroad for contracts as it fears that its domestic market share may decline to 50% from the current 60% in five years due to increasing competition from local and foreign companies. Of Bhel’s order book position of Rs1.25 trillion, global orders account for around Rs7,500 crore. West Asia, Africa and Central Asia are the primary international markets for Bhel, which plans to raise exports to Rs10,300 crore by 2012.

Bhel posted a net profit of Rs3,039 crore on revenue of Rs27,505 crore in the fiscal year ended 31 March. It aims to become a $10 billion-plus firm by 2012. Bhel has an annual capacity of manufacturing power equipment that can produce 10,000MW of electricity. The company says it plans to raise this to 15,000MW a year by December.

Adani Power – Will Infrastructure Finance get Public Participation

zyakaira — Tue, 21 Jul 2009 18:55:38 +0000

Adani Power is coming out with the next Public Issue that will be closely watched in two weeks and with 30 crore shares on offer, it could easily mop up 3000 Crores for its 13.5% post IPO stake on offer. For a total projects of 6600 MW in Mundra, Dahej and Tiroda, the company estimates a cost of Rs 29000 Crores or $ 5.8 b which is a little under Reliance’s estimate of $1m per MW. The promoters are doing a lot of jugglery between the projects as they also own Mundra port et al but they do have preliminary PPA arrangements with Haryana ( Mundra Ph IV) , MP (Tiroda) and Mundra Port, Gujarat, Maharashtra (Mundra, Dahej). these are big ticket issues and one mis-step in the market could easily derail the infrastructure engine for 12-18 months

Adani Power has done some private placements in Mar and even in June and most are at par, with some at a premium of Rs 90, which seems to make for a really large shareholder base and may dilute premium for others? Does that mean they anticipate a weak response to the market? Probably, it is just the cost of long term venture equity. Interestingly out of the @180 million shares post issue, 1450 million would have no lock up or lock in ( lock up) period of less than one year. For the Mndra project, Phase I&II was financed by a consortium of Public Sector Banks borught together by ICICI Bank for Rs 3200 Crores ( $640 m)

[Tags India, India Infrastructure, Power, Indian Economy, Mundra, Ports, SEZ, Financial Markets, Reliance ADA]

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More Capital for Reliance ADA Grp

zyakaira — Tue, 21 Jul 2009 16:01:50 +0000

At its RNRL and Reliance Capital AGMs today, Anil Ambani announced new Capital raising plans for its Insurance and Infrastructure companies including the Western Freeway Sealink, utilizing the current buoyancy in the markets to “unlock value” Thus efforts continue to overcome challenges to RNRL from the new legal action by customers and Government for actioning RIL PSC (Production Share Contracts)

Reliance ADA Grp made plans public for spending Rs 10000 Crores ($2b) to add 20MT pa capacity in Cement making apart from reiterating its earlier plans for Insurance ( That would be a large 1000 cr, $200m issue before QIP). Reliance also announced that it would be diversifying into Investment Banking later this year. They have recently floated a Domestic Investor focussed Private Equity fund and will obviously learn from previous aborted ventures of Rel Capital when it was more a shared concern of the two brothers as also a direct support line for Grand Ambani plans

In related news, Yes Bank has also organized a $250 m QIP while, IDFC has added 40K ESOPs to its capital and IFCI has acquired Rs 300 cr ( $60m of MCX from the software team at FTIL) The iron is hot, and ADA has always been the more financially literate and savvy teams.

[Tags India, India Infrastructure, IPOs, Infrastructure, Indian Economy, Reliance ADA, Anil Ambani]

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