BGR Energy bags contract for Rs 1698 crore power plant

BGR energy has received an EPC (Engineering, Procurement and Construction) contract to set up a 600 MW coal fired power plant for TRN Energy Private limited. TRN Energy Private Limited is a subsidiary of ACB (India) Power Limited.

The total value of this contract is Rs 1698 crore and has two units of 300MW each. Unit I is to be completed in the next 29 months, while unit II in 32 months. This project is based in Nawpara Village in Chhattisgarh and has already received forest and environmental clearances. Land acquisition has also been completed. The project has received coal linkage from South Eastern Coal Limited and the company has signed a long term power purchase agreement for 35 per cent of its power requirements with the Government of Chhattisgarh. 

Its order book position for the second quarter stood at Rs 7266.9 crore, of which 6716.4 cr worth of orders are from from Power projects.  According to the investor presentation uploaded on the website, BGR Energy derived 93 per cent of revenues from Power projects in FY11. Its revenues from power projects have grown sharply in the last three years i.e. from Rs 1644 crore in FY09 to Rs 4410 crore in FY11. The company is currently developing two EPC projects with a total capacity of 1800 MW and 4 Balance of plant (BoP) projects with capacity totaling 3820 MW. 

When we contacted the management, they reiterated on the strong current order book position of Rs 9000 crore from the power sector and approx Rs 780 crore from other sectors. BGR energy has also emerged as a successful bidder for the NTPC project and will receive another order worth Rs 3000 crore by the end of this quarter. 

In FY11, the company reported total sales of Rs 4747 crore and net profit at Rs 324 crore. The current order book to sales ratio is 2 times its FY11 sales, which will further increase to 2.69 with the NTPC order. |

As new orders flow in from the power sector, we expect handsome growth in top line as well as the bottom line. When the new legislation recommended by the Power ministry to levy 19 per cent import duty on the foreign power equipments is passed, BGR will see a further rise in its order book.  

The company has previously executed orders for state owned electricity companies in Tamil Nadu, Rajasthan, Maharashtra and Andhra Pradesh. It has also executed more than 226 international contracts. To grow its business further, BGR Energy has to compete with large players like BHEL and L&T, who have set their feet well in the power equipments market.