The Kalyani Group’s flagship company Bharat Forge is planning to make a big foray into the power sector with an investment of up to Rs 50,000 crore and a targeted generation capacity of up to 10,000 MW, over the next ten years.
According to industry sources, the company plans to set up power plants in Gujarat, Maharashtra, coastal Andhra Pradesh and Tamil Nadu.
“The group plans to diversify into other capital goods segment to de-risk itself from relying only on the auto components business. It has identified power sector as a priority area and is looking at generating 10,000 MW of power in the next ten years,” a source said.
With each mega watt requiring an investment of about Rs five crore, Bharat Forge’s plans could entail an investment of Rs 50,000 crore, the source added.
When contacted, Bharat Forge Chairman and Managing Director Baba Kalyani said the country’s power generation capacity would have to be increased to nearly 800,000 MW by 2031-32 to sustain an 8 to 10 per cent economic growth over the next couple of decades.
“Bharat Forge’s initiatives in the power sector are geared to help India achieve this. We are making significant investments to address some of the key constraints that the country faces in enhancing power generation rapidly,” he said, but did not comment on specifics.
Source, however, said while the company’s power plants could be largely thermal, there could also be some hydro plants.
“The first of Bharat Forge’s power plants could come up in the next one year either in Gujarat or Maharashtra, which will be a thermal plant with a capacity of 1,320 MW. This could entail an investment of Rs 6,500 crore,” the source said.
From a funding point of view, Bharat Forge will look at developing the power plant on its own through a group company and could come up with an IPO or rope in a strategic partner, the source said.
As part of its diversification plans, already the company has bid for supplying power generation equipment to the state owned NTPC, which has floated a global tender worth Rs 25,000 crore to set up thermal plants in four states.
The Pune based firm has partnered Alstom for the bid and is hopeful of receiving orders worth at least Rs 3,500 crore.
While it bid for all the 11 turbines, it expects to get orders for at least five of them. The turbines have to be installed and commissioned by 2014.
Bharat Forge, the world’s largest forging maker, is diversifying from its core business with an aim to have 70 per cent of its revenues coming in from non-auto verticals.
In the last fiscal, the company posted net sales of Rs 4,774 crore with a net profit of Rs 41.1 crore.