New power plant equipment makers fear losing out to Chinese suppliers

Sunday, 20 Feb 2011

ET reported that Larsen & Toubro, Gammon-Ansaldo and other equipment makers, who hope to rival BHEL in India's power equipment market, fear they would lose out heavily to Chinese rivals as private power firms are willing to place orders only with tough conditions that add costs to their supplies.

Industry officials said that private power firms such as TATA Power, Reliance Power, Patel Engineering, Visa Power and Moser Baer Projects are asking equipment suppliers to give an undertaking that their foreign technology suppliers will ensure proper functioning of the equipment after delivery.

Technology providers, mostly in Europe, US and Japan, are not reluctant to provide such assurances, certification particularly to developing countries like India, and they would give such an assurance, called joint deed of undertaking, only if they also get royalty payment, equipment makers say. This would make it uncompetitive against Chinese equipment.

Industry experts said private power firms are demanding such undertakings, following the trend set by state-run companies like NTPC, Damodar Valley Corporation and state generation companies.

Mr Ravi Uppal MD and CEO of L&T Power told the ET that "Deed of joint undertaking is a double-edged sword. On one side it protects interest of the customer. The flip side is that outside partner also has a major say in which jobs and which terms to participate.”

He said that "When local players have established their credentials this kind of thing should not be insisted upon. The undertaking is being asked from local Indian companies for a joint venture, which they form with technology suppliers. In case of Chinese companies this doesn't apply. Suppliers charge a cost for making domestic suppliers uncompetitive.”

The problem is typical to private equipment companies' dealing in supercritical technology while state-run monopoly Bharat Heavy Electricals Ltd said it was in a position to ask for an exemption from the liability clause.

The energy efficient, supercritical technology is a forte of players in China, Korea and Russia but a relatively new area for Indian manufacturers. Cost of initial supercritical units in the country as it is more due to higher import content and low volumes.

Private power producers feel that fixing responsibility of foreign collaborators is a logical move as power equipment market in India is at a nascent stage. They said most lending institutions also compel generating companies to ask for equipment guarantees.

An Ansaldo Caldaie India spokesperson said that "As a matter of fact no foreign technology leader is prepared to sign a deed of undertaking covering total equipment. Technology providers are willing to sign back-to-back liability clauses. But besides loading to cost for the risk coverage, it is one of the serious bottleneck in up bringing power sector with world class technology at the speed it is required to meet national expectations.”

M S Unnikrishnan MD of Thermax India said that NTPC historically had the principle of taking joint deed of undertaking from technology suppliers. "But it is unfair on private companies' part to ask for it. We have been trying to negotiate with the private companies and inform them about our abilities."

(Sourced from ET)

WISCO raises funds of CNY 10 billion through allotted shares

Sunday, 20 Feb 2011

According to China Finance & Economics news, Wuhan Iron & Steel Company limited allotting shares scheme was approved by China Securities Regulatory Commission recently. WISCO will issue new stocks of CNY 2.351 billion to original shareholders expecting to raise funds of no more than CNY 10.7 billion.

WISCO 10 billion raised funds will be mainly invested in three projects, including purchasing 77.6% shares of WISCO Echeng Steel Co Ltd, 100% shares of WISCO Powder Metallurgy Co Ltd and purchasing WISCO Minerals Co Ltd. pellets manufacturing equipment project as well as supplying circulating fund project.

WISCO stated that, after submitting allotment of shares application materials, according to auditing and advices from NDRC as well as deliberation of the 10th Meeting of the 5th Term of Board, the item about purchasing pellet manufacturing facilities which was planned to use raising funds of CNY 1.216 billion was not approved to be included in the commit money.

Therefore, WISCO reduced funds raise by getting allotment of shares. WISCO announced in October 2010 that it planned to reduce the raised funds from no than CNY 12 billion to no more than CNY 10.7 billion.

After the assets purchasing, WISCO will achieve 4 million tonnes of steel production capacity.

(Sourced from China Finance & Economics news)

JFE Steel to set up JV of color coated steel

Sunday, 20 Feb 2011

It is reported that JFE Steel and JFE Shoji Trade Corporation of Japan are currently in talking with Suzhou Hesheng Special Material of China to set up a JV for making color coated steel flat products

It is said that Suzhou Hesheng would enhance its production to higher grade along with more production volume and JFE Steel would to secure its supply from its Japan's plant and Guangzhou JFE Steel Sheet.

(Sourced from YIEH.corp)

Fangda Special Steel records 819pct growth in 2010 operating profit

Sunday, 20 Feb 2011

It is reported that Fangda Special Steel Technology Co Ltd. achieved operating income of CNY 12.16 billion up by 10.97%YoY in 2010. The net profit of its holding company at CNY 300 million was up 818.18%YoY and earnings per share hit CNY 0.23.

In 2010, the company produced pig iron 2.35 million tonnes rising by 1.56%YoY, crude steel 2.57 million tonnes up by 1.85%YoY, finished steel of 2.56 million tonnes up by 2.71%YoY respectively.

In 2011, the company production and operating target is to realize sales revenues of CNY 1.2 billion as well as to yield out pig iron, crude steel and finished steel of 2.28 million, 2.52 million, 2.6 million tones respectively.

(Sourced from MySteel.net for real time access to China steel news!)