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BHEL signs deal with GE for hybrid diesel-electric locomotives news
20 February 2009

Public-owned equipment giant Bharat Heavy Electricals Ltd a public sector equipment manufacturer, has signed an agreement for a joint venture with US-based General Electric (GE) to manufacture diesel locomotives for Indian Railways, with an investment of Rs1,000 crore. The Railways will also hold a stake in the venture.

The facility is to be set up in Marhoura, Bihar, with an initial capacity to manufacture 120 locomotives a year. Bhel would hold a significant minority stake of 23 per cent, while GE would have the majority shareholding of 51 per cent in the joint venture. Indian Railways would take up the remaining 26 per cent.

"We have signed the agreement with GE, but the setting up of the company depends on winning the contract from railways," said BHEL chairman and managing director K Ravi Kumar, while handing over an interim dividend cheque of Rs298 crore to the central government.

GE has emerged the single bidder for assembling and supplying 1,000 dual-fuel locomotive engines to the Railways. The company is yet to receive the final order. "First, GE has to get the order for supplying the locomotives. Only then can we go ahead and form the joint venture," Kumar said.

The proposed joint venture will make 100-120 high-powered locomotive engines capable of running on both diesel and electricity at Marohwara.

GE Locomotive is designing a hybrid diesel-electric locomotive that will capture the energy dissipated during braking and store it in batteries. The energy can then be reused by the crew on demand, reducing fuel consumption by as much as 15 per cent and emissions by as much as 50 per cent compared to most freight locomotives in use today.  The energy dissipated in braking a 207-ton locomotive over the course of a year is enough to power 160 American households for that year. The hybrid locomotive will capture that energy, which can be used to produce more more horsepower and simultaneously reduce emissions and fuel use.

Kumar refused comment on whether the tender would be cancelled because it received a bid from only one company.

The new venture would also include setting up a component manufacturing facility in Bhopal, where BHEL already has a similar plant. "In this new facility, we will manufacture components that will be used in the locomotive assembly unit in Marhaura," BHEL director (industrial systems and products) B P Rao said. BHEL and GE would own equal stake in the component-making unit.

Bhel is also looking to set up a unit to manufacture electric locomotives in Madhepura, also in Bihar. "We are in talks with Siemens, Bombardier and Alstom, which are the three qualified technology providers for the railways' proposed contract," Kumar said. This facility would also manufacture 120 locomotives a year.

The three foreign companies were shortlisted by the Indian Railways to supply electricity-run locomotive engines, but none have made their bids so far. BHEL will make such locomotives in a joint venture with the company that is awarded the tender, Kumar said.

The railway ministry has planned procuring 800 new electric locomotives of 12,000 HP each and 1,000 diesel locomotives of 4,500/6,000 HP each over a period of 10 years. These locomotives will also be maintained by the joint venture company over the next 25-26 years.

BHEL, which has an order backlog of Rs120,000 crore to be completed in 42 months, expects a revenue growth of 25 per cent to 30 per cent this fiscal. Ravi Kumar told CNBC-TV18 that "This financial year and we are expected to see a double digit growth in profits."

He said, "I would be happy if we end the year with 30 per cent, but definitely there will be between 2530 per cent growth in sales." He sees profit growth in the range of 1015 per cent for the financial year.

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BHEL signs deal with GE for hybrid diesel-electric locomotives