India's corporate leaders been supportive of India's nuclear deal with the US for the deal opens up new business opportunities in the construction of power plants and ancillary structures. By Sourya Biswas

Not for nothing have India's corporate leaders been supportive of India's nuclear deal with the US. Not only will the nation's industries be guaranteed an additional source of power, several companies will also directly benefit by being involved in the construction of power plants and ancillary structures.  By Sourya Biswas

In that event, a majority of the corporate head honchos had expressed confidence that the UPA government batting for the nuclear deal will survive the confidence motion and live to usher the country into the landmark deal with the US. (See: Business bats for government)

The current deal, nicknamed the 123 Agreement, was championed by US President George W Bush and Indian Prime Minister Dr Manmohan Singh as a way to bring the US and India closer, and also for India to do business with the cliquish club of international nuclear suppliers.

India is supposed to open up its 14 civilian reactors to international inspectors, and in return will be allowed to buy and trade nuclear fuel, reactors, and spares with the 45-member Nuclear Suppliers Group. Its military reactors will stay off-limits.

The country's energy needs are vast - as its economy booms, the country plans to quintuple its nuclear energy production to as much as 40,000 megawatts by 2020. At an estimated $2.5 billion per 1,000 megawatts, the nearly 30 new reactors India will commission could signal the beginning of a "nuclear renaissance" which will benefit a host of domestic and international companies involved in their construction.

As the government has won the vote, shares of all the domestic power and engineering entities, espeially those like L&T that have announced plans to enter the sector, are expected to rise tomorrow, more than the broader markets.

Initial estimates of Indian beneficiaries run to around 500, and while many may be household names like L&T, HCC, BHEL and Rolta India, smaller entities like Avasarala Technologies, Walchandnagar Industries and SEC Industries are also waiting with bated breath for a successful conclusion to the trust vote and the consequent passage of the nuclear bill.

Moreover, international companies stand to benefit more – as much as $100 billion over the next decade. Some big names in contention are American powerhouses like GE Energy, USEC and Westinghouse Electric as well as French and Russian companies like Areva NP SAS, Atomenergoproekt, and ZAO Atomstroyexport.

However, the benefits to Indian companies are nothing to be sneered at. Bangalore-based Avasarala Technologies, which supplied coolant channel assembly, fuel transfer equipment, reactivity mechanisms and calandria - a vessel that holds the uranium in the reactor core - to some of the nuclear power plants in the past, is looking to expand its capacity in the wave of new orders it is expecting once the deal is passed.

Avasarala was started as a project consultancy company in 1985 to lend technical expertise to the Indian machinery manufacturing industry. In a hope to capitalize the latent potential in this segment, the company forayed into manufacturing in 1986. It began indigenous design, development and fabrication of special purpose process machinery and automation systems for diverse client needs in the global arena.

Leveraging its capabilities as a technically versatile company, it diversified its business interests to allied areas. Today, Avasarala has grown into an Rs.160 crore-corporate entity with an established position in niche categories including engineering design, electron guns, tungsten rod, wire and powder products.

Hyderabad-based SEC Industries Private Limited is another small firm expecting dividends from the nuclear deal. The company, which makes components for the Prithvi missile amongst other airframe structures, had been awarded the prestigious Technology Day Award by the Union Ministry of Science and Technology in 2006. It plans to leverage its existing relationship with the government to contribute to India's future nuclear plants.

Steel players who have been witnessing a tough time on price-rise and exports ban for sometimes may expect a larger chunk of supply-orders from a nuclear power surge. Ahmedabad-based Surer Stainless Steel supplies LP/HP heater tubes to major fabricators that are used in nuclear power plants, is all set for expansion, and expects to increase its 2007 turnover of Rs.191 crore considerably this year.

Another company, though not so small, that is expecting additional revenues from the deal is Mumbai-headquartered Walchandnagar Industries. The company has supplied critical components like the calandria to most of the nuclear power plants in India.

It describes itself as a diversified high-tech heavy engineering project execution company with a strong engineering and project management and manufacturing infrastructure to undertake projects and supply of machinery and equipments in the fields of nuclear power, aerospace, defence, steam generation plants, independent power projects, turnkey cement plants, EPC projects for mineral processing bulk material handling for heavy processes, industrial, planetory and marine gearboxes, turnkey sugar projects.

Chennai-based Shree Venkateshwara Engineering has supplied coolant systems and main critical sub-assemblies to Nuclear Power Corporation of India Ltd (NPCIL). The Rs.22 crore-company expects to double its business in the next two years by bagging additional orders from NPCIL in the wake of the nuclear deal.

Now for the big boys of Indian industry. One of the biggest Indian beneficiaries will be Bangalore-based construction major Larsen and Toubro (L&T). As per industry sources, L&T is likely to get mainstream nuclear projects. It is currently working on the 2,000-megawatt Kudankulam nuclear project.

The Forbes 2000 Company is a true Indian conglomerate, with diverse interests such as construction, hydraulic equipment, electrical and electronic power services, fertilizer projects, medical electronics, financial services and information technology. It generates almost 85 per cent of its revenue from the construction business. The group had annual revenues of $7 billion last year and employs more than 35,000 people.

Hindustan Construction Company, also known as HCC, has executed four nuclear power plants in India and is working on another two, is hopeful of adding few more to its portfolio. Soon after the news of Left parties withdrawing their support, some top officials of the company had met government representatives.

HCC is a construction company working in India for the past 80 years. With its vision statement of "being the industry leader and a market driven engineering construction company renowned for excellence, quality, performance and reliability in all types of construction", HCC has been working in various sectors of construction including transportation, power, marine projects, oil and gas pipeline constructions, irrigation and water supply, utilities and urban infrastructure.

The company has an executed some of the best civil engineering projects across the nation. It also qualifies to be the first construction company in India to be certified for ISO 9001, ISO 14001 and OHSAS 18001 for its Quality, Environmental and Occupational Health & Safety Management System. The company claims to have executed 60 per cent of construction related work for in nuclear plants in India.

Rolta India has a substantial market share in engineering, safety design and project management services for nuclear power plants. The company expects to add few more projects after this deal. It has a tie-up with US-based Stone & Webster, which has been involved in the establishment of around 70 per cent of the American nuclear reactors. Stone & Webster's parent has 20 per cent in Westinghouse Electric, a nuclear reactor maker.

State-owned entities are also very much in the fray. Bharat Heavy Electricals (BHEL) supplies up to 500 megawatt of equipment to NPCIL. It has an existing tie-up with Siemens for nuclear technology and is looking for additional collaborations to manufacture equipment of up to 700 MW and 1,500 MW. National Thermal Power Corporation (NTPC) is reportedly in talks with NPCIL for setting up a 2000-megawatt nuclear plant.

Some other companies who also stand to benefit are:

• Alstom Projects India – already makes nuclear reactors and rotors. Its parent company is a world leader in conventional nuclear projects. It makes turbines for nuclear power stations.
  
• Gammon India – has undertaken turnkey construction for nuclear projects.
  
• Crompton Greaves – works with NPCIL. It has completed a switchyard for a nuclear project.
  
• ABB – makes components for power projects. Its parent company's exposure includes new nuclear power plants, systems and components.
  
• Tata Power Company – has tied up with some major nuclear equipment suppliers like Areva. It already has a relationship with Toshiba.

International companies have had difficulty penetrating the Indian nuclear market thanks to sanctions that date back a decade. In 1998, India tested a nuclear bomb near the border with Pakistan. The resulting international trade sanctions, led by the US, starved India's nuclear reactors of uranium and its elite scientific institutes of super-fast computers and other equipment that Washington deemed sensitive, or dual-use technology. However, all that may soon change.

Possible beneficiaries are:

• France's Areva – has reportedly been in site-specific negotiations with NPCIL. Has exploratory agreements in place that almost assure it of a site in western India.
  
• Russia's Atomenergoproekt and Atomstroyexport – already helping India build a nuclear reactor in Kudankulam.
  
• USA's GE Energy, USEC and Westinghouse Electric – considerably dependent on India signing the Convention on Supplementary Compensation (CSC). *

* CSC is an international treaty that created a global pool of money to pay victims of nuclear disasters, and since India's not a party to it, any American-built reactors would have to shoulder their own civil liabilities - a cost that would likely prove prohibitive. Russian and French state-owned competitors wouldn't have that problem, since those companies could claim sovereign immunity in case of an accident.