Alstom and Bharat Create Joint Venture to Manufacture Supercritical Turbine-Generator Sets in India

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Bharat Forge Limited (BOM:500493) (Pune, Maharashtra), an Indian auto-components manufacturer and the world's second-largest forgings major, and Alstom SA (EPA:ALO) (Levallois-Perret, France) entered into a joint venture agreement to set up a manufacturing facility in India for high-value supercritical turbine and generator sets in the range of 600 megawatts (MW) to 800 MW for thermal and nuclear power plants. The proposed unit will have a production capacity of 5,000 MW per year and will commence with production of equipment for thermal power plants to be followed by equipment for nuclear power plants when the sector opens up in India. The joint venture is expected to require an investment of about $200 million to $240 million over a period of five years. Alstom will hold a 51% stake in the venture, with Bharat Forge holding the balance. The two firms will also set up another joint venture to manufacture auxiliary units of power plants. Bharat Forge will hold a 51% stake in this joint venture and Alstom will hold the balance.

The two firms are scouting for 1,000 acres of land to set up the production facility and are in talks with the state governments of Andhra Pradesh, Gujarat, Maharashtra and Tamil Nadu. The companies hope to set up their manufacturing unit at a coastal region to facilitate imports and transportation of components that weigh in excess of 1,000 tons. The production unit is likely to commence operation within a period of three years after the site is finalized. The firms are aiming to manufacture the first turbine-generator set by 2012.

The deal would enable Bharat Forge to diversify into the power sector, whereas Alstom would be able to foray into the manufacture of turbine-generator sets. The proposed joint venture is also likely to enter into a memorandum of understanding with Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi) to manufacture super-critical boilers. The Alstom-Bharat Forge agreement is being viewed as a shot in the arm for the Indian government's initiative of promoting domestic large-scale manufacturing of power equipment to meet the target of adding 78,577 MW of power generation capacity in the country by 2012.

Several international players are riding high on the opportunities generated in the Indian power sector and more specifically in the supercritical technology space. Alstom has an existing deal with BHEL for the manufacture of supercritical boilers. Mitsubishi Heavy Industries Limited (TYO:7011) (Tokyo, Japan) has teamed up with Larsen & Toubro Limited (BOM:500510) (Mumbai) while Toshiba Plant Systems and Services Corporation (TYO:1983) (Yokohama, Japan) has paired with the JSW Group (Mumbai) for the manufacture of supercritical equipment in India.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.