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

Bharat Forge Limited (Pune, Maharashtra), an auto-components manufacturer and the world's second largest forgings company, and Alstom SA (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 the production of equipment for thermal power plants to be followed by equipment for nuclear power plants when the sector opens up in India. According to reports from Industrial Info Resources (Sugar Land, TX), this joint venture is expected to entail an investment of $204.29 million to $245.15 million over a period of five years. Alstom will hold a 51 percent stake in the joint venture, and Bharat Forge will hold the remainder. The two firms will also set up another joint venture to manufacture auxiliary units of power plants. Bharat Forge will hold a 51 percent stake in this joint venture and Alstom will hold the rest.

The 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 are looking to set up a manufacturing unit at a coastal region to facilitate imports and the transportation of components that weigh more than 1,000 tons. The production unit is likely to commence operations within three years after the site is finalized. The firms aim 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 (BHEL) (New Delhi) to manufacture super-critical boilers. The Alstom-Bharat Forge deal 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 to manufacture supercritical boilers. Mitsubishi Heavy Industries Limited (Minato, Tokyo) has teamed up with Larsen & Toubro Limited (Mumbai) while Toshiba Plant Systems and Services Corporation (Yokohama, Japan) has paired with the JSW Group (Mumbai) to manufacture supercritical equipment in India.

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