Bhel shrugged off overall war fears to mount up on gaining a contract to set up two 500 mw units for NTPC.

In response, the scrip of the state-run power equipment maker edged up 0.9% to Rs 220.70. The scrip gained as much as 2% to the day's high of Rs 223.15 earlier. Around 517,000 Bhel shares were traded on BSE in late afternoon trades.

In contrast, the BSE Sensex was down 65.96 points to 3,152.77.

The Bhel stock is currently trading at a 52-week high, having rallied sharply over the last few months. However, the surge came not without that high degree of volatility. Bhel is quite a favourite with institutions in the light of the company's huge order book position and the sustained flow of new orders. Private mutual fund Alliance Capital is said to have mopped up Bhel shares recently.

Bhel on Sunday announced that it has secured a contract for setting up the 1000 mw Stage-III of Vindhyachal Super Thermal Power Station in Madhya Pradesh, comprising 2 units of 500 mw. In its efforts to meet the capacity addition target for the Tenth Plan, NTPC has embarked on the negotiation route for finalising the order with Bhel. This methodology shall not only ensure capacity addition of 1000 mw in the Tenth Plan but also save time and cost in the execution of the project, Bhel has said. The contract is valued at Rs 2,125 crore (Rs 21.25 billion).

Bhel's scope of work in the contract envisages manufacture, supply, erection and commissioning of steam turbines, generators, boilers, associated auxiliaries, balance of plant and electricals for 2 sets of 500 MW capacity rating, besides state-of-the-art controls & instrumentation, electrostatic precipitators  and 400kV & 132kV switchyard.

The first set is targeted for commissioning (by Bhel) in a tight schedule of 42 months, followed by the second unit six months thereafter. With the completion of stage-III, the cumulative generating capacity of Vindhyachal STPS will be enhanced to 3260 MW, making it the largest power generating station in the country. Bhel is presently executing contracts at Talcher STPS in Orissa, Rihand STPS in Uttar Pradesh and Ramagundam STPS in Andhra Pradesh for NTPC. All the projects are progressing on schedule.

The Union Budget for 2003-04 has proved to be a mixed one for Bhel. On the one hand, it has slashed customs duty on high voltage transmission equipment from 25% to 5%. The measure will reduce the total cost of import of such equipment and may put pressure on demand for domestic power equipment. On the other hand, the budget has been held to be favourable for the power sector in the long term due to the proposed reforms in the sector. The budget has laid much emphasis on infrastructure, which could form the core trigger for industrial development. Other announcements include the extension of the mega power project policy to all power projects. Also, the Electricity Bill is expected to be passed in Parliament soon.

Analysts say the bill will aim at improving the health of state electricity boards. This, in turn, will help Bhel improve its financials as the power equipment major receives 60% of its revenues from SEBs.

For the third quarter ended 31 December 2002, Bhel posted a net profit growth of 1.5% to Rs 81.33 crore, compared to Rs 80.15 crore in the corresponding period of the previous year. Total income increased by 14% to Rs 1,699.76 crore (Rs 16.99 billion) from Rs 1,490.17 crore (14.90 billion) in DQ 2001.