BHEL and HEC sign MoU to form JV Company for supply of Castings and Forgings; Move to ease supply of critical input material for manufacture of Power Plant Equipment

Ranchi, September 6 - Aimed at synergizing the strengths of the two public sector engineering giants in the core sector , Bharat Heavy Electricals Limited - BHEL, the largest engineering and manufacturing enterprise in India in the energy-related infrastructure sector and Heavy Engineering Corporation Limited HEC , one of the largest manufacturers of capital equipment and machine tools for core sector industries , have signed a Memorandum of Understanding MoU to form a Joint Venture Company JVC. The JV Company will cater to the requirements of castings and forgings of both BHEL as well as HEC on mutually beneficial terms.

The move, to set up the JVC on 50-50 equity participation basis comes at a crucial juncture when the nation is looking at adding huge power generation capacities of 78,000 MW and 85,000 MW in the 11 th and 12 th plans, respectively . In addition, the steel and mining sectors are also poised for major expansion .

In the presence of Sh. Sontosh Mohan Dev ,Honble Union Minister for Heavy Industries and Public Enterprises and Sh. Shibu Soren , Honble Chief Minister of Jharkhand , the MoU was signed here today by Mr. K. Ravi Kumar , Chairman and Managing Director, BHEL , and Mr. G.K. Pillai , Chairman and Managing Director, HEC . Sh. Subodh Kant Sahay , Honble Union Minister of State Independent Charge for Food Processing Industries Sh. Raghunath Jha , Honble Union Minister of State for Heavy Industries and Public Enterprises and Sh. Jairam Ramesh , Honble Union Minister of State for Commerce and Power also graced the occasion.

Sh. T.K.A. Nair , Principal Secretary to the Prime Minister and Dr. Satyanarayana Dash , Secretary , Ministry of Heavy Industries and Public Enterprises , as well as Directors on the Board and other senior officials of BHEL, HEC and the Ministry of Heavy Industries and Public Enterprises, were also present.

Expressing his happiness at BHELs progress in preparing itself to meet the future challenges in the power sector , Sh. Sontosh Mohan Dev said in his address that the company has augmented its power equipment manufacturing capacity to 10,000 MW per annum in December 2007 and is well on its way to enhancing it further to 15,000 MW per annum by December 2009 . BHEL will also be taking up an expansion initiative of 20,000 MW after that . Today we are crossing another milestone in the capital goods capability in the country with the coming together of BHEL and HEC for making a JV company to supply Castings and Forgings , he said.

The minister said that the Foundry Forge Plant FFP of HEC has got the basic required infrastructure , facilities and capacity which after some renovation and modernisation will be able to meet the huge demands of castings and forgings arising out of the power generation capacity augmentation programme in the country . I see a significant role for the new JV in the Govt. of Indias power generation capacity addition programme , he said.

The new JV Company will also manufacture some of the castings and forgings required by the two units of HEC , i.e. Heavy Machine Building Plant HMBP and Heavy Machine Tools Plant HMTP. This will help in increasing manifold the turnover of these two units of HEC also , said Sh. Dev.

Earlier, in his address , Mr. K. Ravi Kumar , CMD , BHEL said that today , BHEL has another important reason to rejoice as it faces the future with optimism . BHEL was established exclusively for meeting the power generation needs in the country and in order to keep pace with the countrys power development programme , we are planning to hike our manufacturing capacity to 20,000 MW by 2011-12 . BHEL also plans to become a Rs.45,000 Crore company by 2012 , he said.

The CMD further said that the country is on the threshold of adding large power generating capacities and one of the impediments in the supply chain management is the timely availability of Castings and Forgings . While BHEL has an in-house capacity at its Central Foundry and Forge Plant , Haridwar , we are also dependent on imports . The general boom in the world market is placing a premium on deliveries of Casting and Forgings . It is in this context that BHEL has been looking for developing alternate sources . The Foundry and Forge Plant of HEC has got the basic required infrastructure , facilities and capacity which after some renovation and modernisation will be capable of manufacturing some of the Castings and Forgings required by BHEL , Mr. Ravi Kumar said.

I am sure that this JV will go a long way in fulfilling the aspirations of both the companies and provide the critical input material needed in power plant manufacture , he added. This would enable expeditious implementation of power projects through timely supply of equipment . This in turn would contribute to quicker enhancement of required electric power capacity in the country , said the CMD.

HECs contribution to the equity-investment of the joint venture company will be by way of transfer of the plant and equipment whereas BHEL will infuse a matching amount towards the equity capital of the joint venture. BHEL will also provide the necessary technological support and guidance required by the JV Company . Business will be give n on preferential basis on a benchmark price to the JV Company by BHEL and HEC .

BHEL has been committed to the nations power development programme and has reaffirmed its commitment to the Indian Power Sector by equipping itself for the future , by way of technology, facilities and trained manpower to meet the countrys power forecast for the 11 th Plan and beyond.