Cethar Vessels to cut boiler price, start price war

December 31st, 2010 - 3:37 pm ICT by IANS  

Chennai, Dec 31 (IANS) Super critical boilers - those which operate at high temperature and pressure - are going to cost less in 2011 as India’s second largest boiler maker, the Rs.1,046-crore Cethar Vessels, is set to reduce price drastically and ignite a price war, a top company official said Friday.”We will bring down the price from Rs.1.25 crore per megawatt to Rs.1.08 crore in 2011,” the Tiruchirapalli (Trichy)-based company’s chairman K. Subburaj told IANS.

Currently the prices of super critical boilers are being quoted for Rs.1.75-1.80 crore per MW.

If one goes by Cethar Vessel’s proposed price, the saving per megawatt will be a whopping Rs.67 lakh and for a 660 MW project the savings will amount to around Rs.442 crore.

Cethar Vessels’ production technology is from US-based Riley Power, which in turn has got the know-how from Siemens. With the tie-up, Cethar Vessels can make boilers with capacities of 600 MW, 660 MW, 800 MW and 1,000 MW, according to Subburaj.

The company’s plant has an annual capacity of 8,000 MW and it is in the process of expanding it to 12,000 MW, Subburaj said.

Cethar’s pricing strategy is expected to put pressure on others like Larsen and Toubro, Thermax and BGR Boilers.

Asked whether there will be a price war in the super critical boiler segment, A. Manjunath, managing director of Ansaldo Caldaie Boilers India, said that BHEL (Bharat Heavy Electricals Ltd) is the benchmark for the Indian players and that if BHEL announces a price cut, it will be a matter of concern for the industry.

According to him, cost is a fact while pricing is a strategy for any company. “In the case of super critical boilers, the involvement of expats will be high and hence the cost will be high. Pricing is determined by the market forces,” Manjunath added.

However, he discounted the possibility of excess capacity in the Indian market with new players setting up operations and mega orders going to China. “The cake is big for every player to have his share,” he claimed.

Another industry official told IANS on condition of anonymity: “I have no idea of Cethar Vessel’s pricing basis. The design variations between different brands are marginal and the input cost for all the manufacturers will vary only marginally.”

Subburaj insisted that the pricing strategy is not targeted to wean away power project promoters who have ordered Chinese equipments.

“Big Indian private players may go for Chinese make and the Indian public sector units like NTPC may opt for BHEL. There are several smaller power project promoters who will be looking for Indian make power equipments,” he said.

Cethar Vessels, through its subsidiary Cethar Energy, is planning to put up projects of 2,000 MW thermal power in Tamil Nadu, Andhra Pradesh or Orissa.

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