Is Bharat Forge ..cmp Rs.376.85 , 2 FV..going cheap?.........

Friends,
I am pasting the last interview of Baba Kalyani , MD of Bharat Forge.
Here its says that they have come out as the lowest bidder for NTPC order which is as big as Rs 7200 cr which is big enough for even L&T will envy at.
Reading at the interview it looks like they are also going in making turbine use for Nuclear Power for Alsthom.
I have been recomending Bharat Forge in many of my list which I perticularly write for A gr stocks.
But reading the future plans, it seems Bharat Forge is going cheap even at Rs 376....


Read on:
Lowest bidder for Rs 7,200cr NTPC order: Bharat Forge



Published on Wed, Oct 13, 2010 at 10:55
Updated at Wed, Oct 13, 2010 at 11:46
Source : CNBC-TV18

Q: If you could confirm for us that you are indeed the L1 for the Rs 7,200 crore NTPC order in your joint venture Bharat Forge Alstom?

A: Yes, I believe so. That’s the information we have got at the opening of the bids.


Q: So, you should go on to clinch that order?
A: I don’t know about that. I think it’s a long process between now and getting order, but we will be a major player in the power equipment business in India. I think this also proves that we will be a competitive player; I think the pricing levels also prove that we would be rather globally competitive in this business.


Q: What procedural issues are involved, once you emerges L1, which seems to be the fact corroborated from various sources?
A: I think there are internal procedures of NTPC. I don’t know what they are, but it’s their internal procedures and not much to do with us. So, I guess it’s just a normal process of going through a tender bid, evaluation and decision making.

Q: How significant a start would be for the joint venture, if you indeed go on to bag this order, the way it is staggered the revenue flows from NTPC?
A: I think it’s extremely significant. One would expect to get a significant portion of this bid. I think somewhere in the region of five turbine/generator (TG) sets that will be more than a billion euro. That’s a good start for any manufacturing entity that’s setting up a greenfield facility with fully integrated manufacturing. One of the key successes for us is we are integrated on the component side with Bharat Forge’s component capability and that what makes us competitive in this business.


Q: If you do go on to bag it, would it be a profitable one or have you been super aggressive to bag this as your maiden entry?
A: I think it will be profitable. It’s just like in our business we are most competitive globally, but we also have the largest earnings before interest, taxes, depreciation, and amortization (EBITDA) margin. I think as this business, the power equipment business, develops we will kind of move in the same direction.


Q: How is the joint venture with Alstom structured?
A: It’s structured on the basis of 50:50. Alstom has very high level of technology; it is the largest player in the steam turbine business in the world today with more than 25% installed capacity. Bharat Forge has demonstrated a high capability in manufacturing metal components on a global basis in a highly competitive environment. I think a combination of Alstom and Bharat Forge for something like this is quite potent.


Q: So 50% of the revenues and the upside from that joint venture will be captured for Bharat Forge shareholders?
A: That’s right.

Q: What kind of an order book are you targets because you had indicated earlier that 40% of your Bharat Forge revenues will come from the non-auto business in FY12?
A: Yes, you are right and I think we are pretty much on target; we might even be little earlier than that. We are making good progress on our non-automotive business in the energy sector, in the railways, in the marine, in the construction equipment.
As far as power equipment is concerned, we are setting up a capacity for roughly about 5,000 MW a year. That will translate in terms of revenues or something like Rs 6,000-7,000 crore a year. Our capacity also will include turbine generators required for the nuclear power plant including up to 1,600 MW. So, there is a lot of high technology manufacturing that will happen in our facilities.


Q: By when do you expect to hear from NTPC with a final nod on the order?
A: I would expect in another six-eight weeks.


Q: There is also been some reports that BF Utilities will sell a 10% stake in the Nandi Corridor Project to JP Morgan private equity. Is that true?
A: I don’t want to comment on that. That’s a business, that’s trying to raise some capital nothing is finalised as of now. But there is a lot of interest from any people for this, so we will see how it goes.


Q: Are you talking actively to private equity investors for a stake sell?
A: Yes, we are.