State-owned engineering giant Bharat Heavy Electricals Limited (BHEL) has recently announced a significant achievement by securing a major order worth over Rs 11,000 crore from Adani Power and its subsidiary, Mahan Energen Ltd. The contract, signed on August 25, involves the supply of critical equipment for three large thermal power projects, marking a milestone in BHEL's portfolio.

The Scope of the Project

The contract includes the supply of essential equipment such as boilers, turbines, and generators for the three thermal power projects. These projects will each have a capacity of 2x800 MW and will be developed using advanced supercritical technology. The thermal power projects are strategically planned at three different locations:

Kawai Phase-II in Rajasthan

Kawai Phase-III in Rajasthan

Mahan Phase-III in Madhya Pradesh

The combined value of these orders amounts to more than Rs 11,000 crore, excluding GST, making it one of the most substantial orders BHEL has secured in recent times.

Completion Timeframe and Project Details

In their official filing with the Bombay Stock Exchange (BSE), BHEL has outlined the timelines for the completion of these projects. The company has committed to completing the Kawai Phase-II project within 49 months, the Kawai Phase-III project within 52 months, and the Mahan Phase-III project within 55 months. These timelines reflect BHEL's confidence in delivering complex engineering projects within stipulated deadlines.

BHEL's responsibilities extend beyond just supplying the equipment; the company will also oversee the erection and commissioning processes for these thermal power plants. This comprehensive involvement ensures that BHEL maintains control over the quality and efficiency of the project execution.

The Impact on BHEL’s Financials

This order is expected to have a positive impact on BHEL's financial performance, especially considering the recent growth trajectory of the company. In the June quarter of FY 2024-25, BHEL reported a revenue growth of 9.6 per cent year-on-year, amounting to Rs 5,484 crore. The securing of this large-scale order from Adani Power is anticipated to further boost BHEL's revenue in the upcoming quarters, potentially leading to an appreciation in its stock value.

Adani Power’s Strong Financial Performance

On the other hand, Adani Power has also been witnessing a robust financial performance. In the April-June period of FY 2024-25, Adani Power's consolidated continuing profit surged by 95 per cent to Rs 4,483 crore, up from Rs 2,303 crore in the previous year. This growth has been driven by a significant increase in consolidated power sales volume, which grew by 38 per cent to 24.1 billion units in Q1 FY 2024-25, compared to 17.5 billion units in Q1 FY 2023-24.

Strategic Importance of the Projects

The thermal power projects at Kawai and Mahan hold strategic importance for both Adani Power and BHEL. For Adani Power, these projects are part of their ongoing expansion in the power sector, aimed at meeting the increasing demand for electricity in India. For BHEL, the successful execution of these projects will not only enhance its reputation as a leading supplier of power plant equipment but also strengthen its position in the highly competitive power sector.

Moreover, these projects are aligned with India's broader energy strategy, which emphasizes the need for reliable and efficient power generation infrastructure to support economic growth. The use of supercritical technology in these power plants is particularly noteworthy, as it represents a significant advancement in thermal power generation, offering higher efficiency and lower emissions compared to traditional subcritical technologies.

Conclusion

BHEL's securing of an Rs 11,000 crore order from Adani Power for the development of three thermal power projects is a testament to the company's engineering expertise and its strong presence in the power sector. The successful execution of these projects will not only contribute to BHEL's financial growth but also support India's energy infrastructure development. As BHEL embarks on this significant endeavor, the eyes of the industry will be on the timely and efficient delivery of these critical projects, which are poised to play a vital role in India's energy landscape.

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