Bharat Forge-Alstom Partnership Lowest Bidder for NTPC-DVC Bulk Turbine Supply Contract

---

Researched by Industrial Info Resources (Sugar Land, Texas)--The joint venture comprising equipment manufacturers Bharat Forge Limited (BSE:500493) (BFL) (Pune, Maharashtra) and Alstom S.A. (EPA:ALO) (Levallois-Perret, France) has offered the lowest bid for the competitive $1.6 billion bulk supply contract to be awarded by the partnership between NTPC Limited (BSE:532555) (New Delhi) and Damodar Valley Corporation (DVC) (Kolkata, West Bengal). The contract involves the supply of 7,260 megawatts (MW) worth of supercritical turbine generator sets, nine of which are required by NTPC and two by DVC.

NTPC issued the tender for bulk ordering of equipment following the Indian government's policy that seeks to promote the development of India's supercritical power equipment manufacturing sector and the indigenization of new technology. The BFL-Alstom joint venture has outbid offers from partnerships between major power equipment manufacturers such as Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi) and Siemens AG (NYSE:SI) (Munich, Germany), and the JSW Group (Mumbai) and Toshiba Corporation (TYO:6502) (Tokyo) combine. The winning bid of BFL-Alstom was worth about $2.12 billion. While the BHEL-Siemens bid was the second-highest, that of JSW-Toshiba was third. Details about the second- and third-highest bids are not available.

Both the BHEL-Siemens and the JSW-Toshiba partnership will secure part of the contract, provided that they match the price quoted by the BFL-Alstom partnership. As per the plan outline, while the winning bidder will secure a supply order for five units, the second- and third-lowest bidders will secure supply orders for four and two units, respectively. The contracts are expected to be awarded by the end of October.

Larsen & Toubro Power Limited (L&T Power) (Mumbai), the new power arm of India's engineering and construction major Larsen & Toubro Limited (BSE:500510) (Mumbai), was disqualified from the bidding process, and the company retaliated by filing a special-leave petition in the Supreme Court, in an effort to stop NTPC from opening the price bids and awarding the contract. The Supreme Court will deliver its judgment on October 22 after making it clear that although it has accepted the special-leave petition, it will not get involved in the matter. L&T Power had earlier appealed to the Delhi High Court, but its petition was rejected. L&T Power has just made an entry in the power equipment supply sector, and securing the NTPC-DVC contract is critical to its success.

NTPC had disqualified L&T Power from both the boiler and turbine supply bids, on the grounds that the company's technology collaboration agreement with joint venture partner Mitsubishi Heavy Industries (TYO:7011) (MHI) (Tokyo) did not bear the signature of L&T Power, as required, but that of the Japanese giant. The tender had specified that only those bidders who agreed to set up manufacturing facilities in India could participate in the tender process. Since only L&T Power and BHEL had bid for the boiler supply contract, NTPC had to cancel the tender and call for new bids after L&T Power was disqualified. The turbine generator bidding process continued since there were three parties competing for the contract. The new boiler tender has been floated, and interested parties include the L&T Power-MHI combine; the BHEL-Alstom combine; the BGR Energy Systems Limited (BSE:532930) (Chennai, Tamil Nadu) and Hitachi Limited (NYSE:HIT) (Tokyo) combine; and the GB Engineering Enterprises Private Limited (Tiruchirapalli, Tamil Nadu) and Ansaldo Caldaie SpA (Milan, Italy) combine.

The government's policy has triggered a spate of new domestic manufacturing ventures by the private sector, in technological collaboration with overseas partners. While BHEL is ramping up its equipment production capacity, other companies such as BFL, BGR Energy, GB Engineering, JSW Energy (BSE:533148) (Mumbai), and Thermax Limited (BSE:500411) (Pune, Maharashtra) are some of the companies making an effort to enter the sector.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.