A Integrated Approach on International Contracting Final

8/8/2019 A Integrated Approach on International Contracting Final

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1.1 INTRODUCTION OF THE ORGANIZATION

FULL NAME : KALAPATARU POWER TRANSMISSIO

YEAR OF ESTABLISHMENT : 1981

ADDRESS : PLOT NO. 101, PART III,

G.I.D.C. ESTATE,

SECTOR 28,

GANDHINAGAR 382028,

GUJARAT, INDIA

PRODUCT OF COMPANY : TRANSMISSION TOWER

RAW MATERIAL : STEEL, ZINC

INSTALLED CAPACITY : 1,08,000 MT PER ANNUM

LAND AREA : 72,000 SQ. MTRS

CORPORATE OFFICE : 111,MAKER CHAMBERS, IV,

NARIMAN POINT,

MUMBAI 400 021

TEL. NO. 91-22-22822888

FAX NO. 91-22-22041548

REGISTERED OFFICE : PLOT NO. 101, PART III,

G.I.D.C. ESTATE, SECTOR 28,

GANDHINAGAR 382028,

GUJARAT, INDIA

E-mail :kptl@Kalpa-taru power.com

Website :www.Kalpa-taru power.com


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1.2. INTRODUCTION OF POWER INDUSTRY

Power industry is consist of three major sub-category i.e. Power Generation, Power

Transmission and last is Power Distribution. Indian Government expect about US $150 billon

investment opportunity in power sector over next 5 years.

POWER GENERATION

The Ministry of Power has set a goal - Mission 2012: Power for All. A comprehensive

Blueprint for Power Sector development has been prepared encompassing an integrated strategy

for the sector development with objectives of Sufficient power to achieve GDP growth rate of

8%, Reliable of power, Quality power, Optimum power cost, Commercial viability of power

industry and Power for all.

1.TOTAL INSTALLED CAPACITY:

As on 31-05-2010Source:CEA

Sector MW %age

State Sector 80,525.12 52.5

Central Sector 50,992.63 34.0

Private Sector 29,834.05 13.5

Total 1,61,351.80


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Renewable Energy Sources(RES) include SHP, BG, BP, U&I and Wind Energy.

India has fifth largest Electricity Generation capacity in the world. Currently India is

facing huge demand-supply Gap. All India average energy shortfalls of 10.1% in regular time

and 13.3 % in peak demand in 2009-10. As a result there is need for huge investment in a power

generation sector. The Government of India has an ambitious mission ofPOWER FOR ALL

BY 2012. This mission would require that our installed generation capacity should be at least 2,

00,000 MW by 2012 from the present level of 1, 61,351.80 MW. The government is, therefore

exploring several alternatives to bridge the gap. This includes grater energy cooperation with

neighboring countries such as Nepal, Bhutan, Bangladesh and Sri lanka.

There is immense potential to step up power exchange, particularly with Nepal and

Bhutan, both of which have a huge hydro potential that has not yet been fully exploited.

Fuel MW %age

Total Thermal 103448.98 64.6

Coal 85,193.38 53.3

Gas 17,055.85 10.5

Oil 1,199.75 0.9

Hydro (Renewable) 36,913.40 24.7

Nuclear 4,560.00 2.9

RES** (MNRE) 16,429.42 7.7

Total 1,61,351.80


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POWER TRANSMISSION

Power transmission can be defined as a Transmission of electricity is defined as bulk

transfer of power over a long distance a high voltage, generally of 132 kV and above. In Indiabulk transmission has increased from 3708 km in 1950 to more than 265,000 km today. The

entire country has been divided into five regions for transmission systems, namely, Northern

Region, North Eastern Region, Eastern Region, Southern Region and Western Region. The

interconnected transmission system within each region is also called the regional grid.

To be able to reach this power to the entire country an expansion of the regional

transmission network and inter regional capacity to transmit power would be essential. The latter

is required because resources are unevenly distributed in the country and power needs to be

carried great distances to areas where load centers exist.

The transmission system planning in the country, in the past, had traditionally been

linked to generation projects as part of the evacuation system. Ability of the power system to

safely withstand a contingency without generation rescheduling or load-shedding was the main

criteria for planning the transmission system. However, due to various reasons such as spatial

development of load in the network, non-commissioning of load centre generating units

originally planned and deficit in reactive compensation, certain pockets in the power system

could not safely operate even under normal conditions. This had necessitated backing down of

generation and operating at a lower load generation balance in the past. Transmission planning

has therefore moved away from the earlier generation evacuation system planning to integrated

system planning.

While the predominant technology for electricity transmission and distribution has been

Alternating Current (AC) technology, High Voltage Direct Current (HVDC) technology has also

been used for interconnection of all regional grids across the country and for bulk transmission

of power over long distances.


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POWER DISTRIBUTION

The total Installed generating capacity in the country is over 149,000 MW and the total

number of consumers is over 144 million. Apart from an extensive transmission system network

at 500 kV HVDC ,400kV 220 kV, 132 kV and 66 kV which has developed to transmit the Power

from the generating station to the grid substations, a vast network of sub transmission in

distribution system has also come up for the utilization of the power by the ultimate consumers.

However, due to lack of adequate investment on T&D works, the T&D losses have been

consistently on higher side, and reached to the level of 32.86% in the year 2000-01.The reduction

of these losses was essential to bring economic viability to the State Utilities.

As the T&D loss was not able to capture all the losses in the net work, concept of

Aggregate Technical and Commercial (AT&C) loss was introduced. AT&C loss captures

technical as well as commercial losses in the network and is a true indicator of total losses in the

system.

High technical losses in the system are primarily due to inadequate investments over the

years for system improvement works, which has resulted in unplanned extensions of the

distribution lines, overloading of the system elements like transformers and conductors, and lack

of adequate reactive power support.

The commercial losses are mainly due to low metering efficiency, theft & pilferages. Thismay be eliminated by improving metering efficiency, proper energy accounting & auditing and

improved billing & collection efficiency. Fixing of accountability of the personnel / feeder

managers may help considerably in reduction of AT&C loss.

VARIOUS GOVERNMENT INITIATIVES

With the initiative of the Government of India and of the States, the Accelerated Power

Development & Reform Programme(APDRP) was launched in 2001, for the strengthening ofSub Transmission and Distribution network and reduction in AT&C losses.

The focus of the program shall be on actual, demonstrable performance in terms of

sustained loss reduction. Establishment of reliable and automated systems for sustained

collection of accurate base line data, and the adoption of Information Technology in the areas of


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energy accounting will be essential before taking up the regular distribution strengthening

projects.

The main objective of the programme was to bring Aggregate Technical & Commercial

(AT&C) losses below 15% in five years in urban and in high-density areas. The programme,

along with other initiatives of the Government of India and of the States, has led to reduction in

the overall AT&C loss from 38.86% in 2001-02 to 34.54% in 2005-06. The commercial loss of

the State Power Utilities reduced significantly during this period from Rs. 29331 Crores to Rs.

19546 Crores. The loss as percentage of turnover was reduced from 33% in 2000-01 to 16.60%

in 2005-06.

The APDRP programme is being restructured by the Government of India, so that the

desired level of 15% AT&C loss could be achieved by the end of 11th plan.Second Initiatives of

Government is Rajiv Gandhi Grameen Vidyutikaran Yojana. Rajiv Gandhi Grameen

Vidyutikaran Yojana (RGGVY) was launched in April-05 by merging all ongoing schemes.

Under the programme 90% grant is provided by Govt. of India and 10% as loan by REC to the

State Governments. REC is the nodal agency for the programme. The RGGVY aims at:

y Electrifying all villages and habitations as per new definition

y Providing access to electricity to all rural households

y Providing electricity Connection to Below Poverty Line (BPL) families free of charge

y Typical Power Transmission and Distribution Scenario with DA components


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1.3. NEED FORINTERNATIONAL (EXPORTS / IMPORTS)

TRADE

Every country in the globe has to depend on the others for some purpose or other. In

modern world the wants are increasing and they cannot be satisfied within a country. All

products/ services cannot be providing within a countrys limit. Crossing the boundaries of

countries or even crossing the boundaries of the world will become the order of the globe, to

fulfill its needs and demands.

Nature has distributed the factors of production unequally over different countries and so

certain countries are endowed with certain resources abundantly. Countries differ in terms of

climatic conditions, natural resources, mineral resources, mines labors and capital resources,

technological competencies, entrepreneurial and managerial capabilities and many other

variables which are essential for producing goods and services. Hence different countries

become experts in certain production / services whereas theories are not so in several others.

Therefore countries depend on each other and get the goods and services from the

countries which are more efficient then themselves.

There are several theories of international trade about which you may be already aware.

These theories indicate or explain why export import is taking place. Just to mention some of

them are

y absolute cost advantage theory

y comparative cost theory

y factor proportion theory

y human capital approach

y natural resources theory

y R & D on product life cycle theory

y Scale economies theory

Thus the international trade is necessitated by so many complex variables / factors and it is

clear that international trade cannot be neglected for development of a country.


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Let us consider a case where Indian company exports cotton fabrics to USA and invoices

the goods in US dollar. The American importer will pay the amount in US dollar, as the same is

his home currency. However the Indian exporter requires rupees means his home currency for

procuring raw materials and for payment to the labor charges etc. Thus he would need

exchanging US dollar for rupee. If the Indian exporters invoice their goods in rupees, thenimporter in USA will get his dollar converted in rupee and pay the exporter.

From the above example we can infer that in case goods are bought or sold outside the

country, exchange of currency is necessary.

Sometimes it also happens that the transactions between two countries will be settled in

the currency of third country. In that case both the countries that are transacting will require

converting their respective currencies in the currency of third country. For that also the foreign

exchange is required.


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2.1. HISTORY OF KALPA-TARU

Kalpa-taru Power Transmission was established in 1981 with the name HT Power

Structure. The Kalpa-taru Power Transmission Ltd. adopted its current name in 1994.Kalpa-taru

Power Transmission Ltd is a part ofKalpa-taru Group. Kalpa-taru Group was started in 1969 byMr. Mofatraj Munot with establishment ofKalpa-taru Properties Pvt Ltd. Today Kalpa-taru

Group has foray into Power Transmission, Oil-Gas Pipeline, Tower Business, Biomass, Power

Distribution, and Logistics business.

Kalpa-taru Power Transmission was established in 1981 with the name HT Power

Structure. The Kalpa-taru Power Transmission Ltd. adopted its current name in 1994.Kalpa-taru

Power Transmission Ltd is a part ofKalpa-taru Group.

It is engaged in the business of designing, fabricating/galvanizing & supplying Towers and

construction and commissioning of extra high voltage transmission lines (up to 800kv) on a Turnkey /

EPC basis in India and overseas.

Fabrication plant at Gandhinagar, Gujarat spread over 48,000 sq. mts. With 5 Nos CNC

Punching and Drilling M/cs(from Ficep, Italy) and an automatic temperature-control

Galvanizing bath (8 Mt*1 Mt*2.4 Mt) with an installed capacity of 1,08,000 Mt p.a. (second

largest in India). It is one of the most sophisticated and cost-efficient Fabricati on Plant for Steel

Galvanized Towers.

The company has its own in-house sophisticated Tower Testing Station and R & D

Centre(near Gandhinagar), which is a state-of-the art facility with a capacity to test square /

rectangular base towers(27Mt*27Mt) up to 800 kV D/C as well as Multi-Circuit Towers Max

.height 80 mts and is one of the largest in Asia. The company has latest Auto-CAD Design

facilities and other proprietary Design and drawing software packages. The company has of

4,00,000 MTs (Metric Tons) and construction of 6500+kms of EHV (extra High Voltage) lines

over the years.

Kalpa-taru word was derived from KALPAVRUKSHA. It means Standing tall.

Looking ahead. The embodiment of realization beneath which one's every wish would be

fulfilled. The resourceful tree of knowledge that has a significant presence in mythology. It is


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this tree that governs the functional and philosophical ideologies at Kalpa-taru, a synonym of the

word Kalpa-Vruksha.

Kalpa-taru Power Transmission Ltd (KPTL) Engaged in the business of designing,

fabricating/galvanising and supplying Towers and Construction and Commissioning of High

Tension Power Transmission Lines (up to 800 KV) on a Turnkey / EPC basis-in India and

Overseas.

A Turnkey Project is a contract under which a firm agrees to fully design, construct and

equip a manufacturing/ business/ service facility and turn the project over to the purchaser when

it is ready for operation for remuneration. It is one of the special modes of carrying out

International Business.

As an EPC contractor, companys scope of work includes design, testing, fabrication,galvanizing of towers and construction activities from survey, civil works/ foundation, erection

to stringing and commissioning of EHV lines, besides procurement of items such as conductors,

insulators, hardware accessories etc. Kalpa-taru also participates in Substation projects on a

partnership basis.

The Kalpa-taru Power Transmission Company has become one of the topmost

companies in the sector of turnkey projects. The construction division of the company has been

conducting surveys, erection, foundation work, and has set up over 6,500 km of projects basedon turnkey in the country.

Kalpa-taru Power Transmission Ltd. 's clients include several State Electricity Boards

and the Power Grid Corporation of India. The company has already designed and supplied

around 450,000 MT of sub-station and towers structures.

Kalpa-taru Power Transmission has 2 fabrication units and the production capacity of

these plants is around 108,000 MT per year.K

PTL has one Plant for a Domestic requirementwhich is situated in Sector 28 Gandhinagar, which has a capacity of 78,000 MTs per annum. And

second plant is situated in Sector 25, Gandhinagar which is 100% EOU plant for Export purpose

and has capacity of 30000 MTs per annum. The average capacity utilization Rate is around 96 %

of total Capacity Installed.


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The plants of the company are technologically advanced and comparable to the best in the world.

Kalpa-taru Power Transmission has also exported the tower plants to Algeria, Mexico, Thailand,

Bangladesh, Australia, Peru, and Turkey. Kalpa-taru Power Transmission has also executed jobs

for international companies like Cobra, ABB, Sumitomo, Alstom, and EnelPower.

STRENGTHS OF THE COMPANY:

Design and Engineering

Testing station and R &D center

Fabrication

Galvanization

Supply chain (by air, sea, etc.)

Construction (of towers)


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2.2. CORPORATE PROFILE

Kalpa-taru Power Transmission Limited is one of the leading companies in the field of

Turnkey projects for EHV Transmission Lines up to and including 800 KV in India and

Overseas. As an EPC contractor, our scope of work includes design, testing, fabrication,galvanizing of towers and construction activities from survey, civil works/ foundation, erection

to stringing and commissioning of EHV lines, besides procurement of items such as conductors,

insulators, hardware accessories etc. We also participates in Substation projects on a partnership

basis.

We also provide EPC services for Distribution Projects of 11/33 kv and also construct

cross country Pipelines, besides Telecom Towers.

Located at Gandhinagar Gujarat, in Western India, Kalpa-taru Power Transmission is a public

listed company with a net profit of Rs.1704.60 million for the year ended March 31, 2010 as

compared to Rs.944.10 million for the year ended March 31, 2009. Net sales for the year are

surged 37.80% to Rs 25973.70 million, while total income for the quarter jumped 37.50% to

Rs.26306.90 million, when compared with the prior year.

The company has a net worth of overUSD 200 Million and an order booking of overRs

50 Billion (USD 1 Billion). The company has also attained distinction of crossing the USD 800

Million (Rs. 40 Billion) market capitalization. On a combined basis (with JMC Projects), the

consolidated turnover has crossed Rs 32.8 Billion (USD 655 Million).

It is a part of the diversified Kalpa-taru Group which has a presence in Real Estate /

Property Development, Civil Contracting, International Trading and Consumer Goods &

Services. The Kalpa-taru group holds over 63% of the equity.

Kalpa-taru Power has two large Fabrication Plants with an annual installed capacity of

108,000 MTs (with a capacity addition of 24,000 MTs in Oct, 2008) one of the largest in theworld and is equipped with modern machineries (including 16 CNC machines) and automated

temperature controlled Galvanizing Baths, besides its own state-of-the-art Testing Station and R

& D Centre. It was the first company in 1994 in the Indian transmission industry to be ISO 9001

certified.


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About 650,000+ MTs of towers and substation structures have already been designed,

manufactured and supplied over the last few years of which over 175,000 MTs has been

exported. Over 250 Tower Tests of 132-500KV have been carried out successfully, including

125 nos. at our own Testing Station, which is one of the largest facilities of its kind in the world.

Besides workmen at the plant & construction sites, the Company employs over 1,400

Managers and Staff. Also, a full-fledged Design / Engineering Department with over 35 qualified

design engineers using PLS Tower, i-tower, STADD, PLSCADD, BOCAD, AUTOCAD

facilties.

Our Construction division has completed over 8,000+ kms of turnkey projects in India

for various clients such as the Power Grid Corporation of India and various State Electricity

Boards (SEBs) of Gujarat, Karnataka, Maharashtra, Rajasthan, Andhra Pradesh, Rajasthan,

Orissa, Tamil Nadu and Madhya Pradesh.

With a strong thrust on Overseas markets, the Company is/has already exported Towers or

is executing/has completed Turnkey projects in :

Asia

Philippines

Malaysia

Vietnam

Indonesia

Thailand

Bangladesh

Nepal

Middle East

Kuwait

UAE

Qatar

Syria

Turkey

Iraq

Africa

Algeria

Ethopia

Zambia

Nigeria

Kenya

Tanzania

Mozambique

Djibouti

Uganda

South Africa

America

USA

Canada

Mexico

Peru

Australia

Tasmania


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Also the Company has worked closely with reputed International EPC contractors like

> ABB SAE (Italy) > Downer (Australia)

> Alstom / Cegelec (France) > Enel Power (Italy)

> Cobra (Spain) > Sumitomo Electric (Japan)

> ETA (UAE) > Siemens

Major part of the business is either from physical exports or deemed exports (i.e domestic

projects funded by multilateral funding agencies like World Bank, Asian Development Bank,

JBIC/OECF, Arab Fund etc). The company is also keen to participate in Infrastructure projects

under BOT/ BOOM or deferred credit financing basis.

Transmission Line Experience

Total supplies Over 6,00,000 MTs

Total physical exports Over 2,00,000 MTs

Tested Over 250 Towers (including over 125 at own Testing Station)

Construction of lines

Total lines from 130kv to 765KV HVDC over 8,000 kms

Our evolution as a leading Infrastructure Player

Kalpa-taru Power is adapting its strategy and business profile to emerge as a

Infrastructure player in the country. Some of the major initiatives taken by the company include :

Distribution Projects: The company has ventured into 11/33 kv lines & substation projects to

benefit from the thrust given to Rural Electrification / APDRP programs of the Ministry of

Power/Distribution Utilities. It has already secured several projects in North India.

Oil & Gas Pipelines: A specialised team and Capex investment in Pipeline equipments has been

done to execute several cross-country pipeline projects for BPCL, GAIL etc.


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Civil Contracting: Our acquisition of a controlling stake (51%+) in the Rs 9 Billion USD 180

Mn JMC Projects, since Feb, 2005 gives us a strong presence in Factories, Industrial Structures,

Buildings, Software Parks and Roads & Bridges. It has also entered into Water Pipelines /

Sewerage, Railways & Civil work for Power Projects. The order backlog is approx. Rs. 20

Billion (USD 400 Million). AfterKalpa-taru's association, JMC has become one of the fastestgrowing small cap companies in the Construction / Civil Engg. sector.


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y 2.3. INFRASTRUCTURE

Fabrication Plant # 1

Gandhinagar (Gujarat, India) - 30 kms from Ahmedabad City/Airport

Area - 48,000 sq.mts (12 Acres)

Capacity - 78,000 MTs per annum

Fabrication Plant # 2 - exclusively for exports / EOU

Gandhinagar (Gujarat, India)

Area - 24,000 sq.mts (6 Acres)

Capacity - 30,000 MTs per annum

Installed Capacity

108,000 MTs per annumProduction : 2007-08 : 80,000 MTs

: 2006-07 : 78,404 MTs

Facilitiesy CNC punching / drilling machines (16 Nos from Ficep, Italy), Capable of handling Angle

sections upto 250*250*35 mm and Plates

y Automatic temperature controlled galvanising bath Capable of coating requirement of

610 and 910 gms per sq.mts (80 to 130 micron) y Tower Testing Station and R&D Centre for testing upto 800KV D/C towers with Tower

Base width - 27M x 27M (square and rectangle), Height - 85mts and uplift capacity per

leg of 500 MT is one of the largest facility of its kind in the world.


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y Over 12 nos. of Tension Stringing equipments upto 8/16 Tonnes (capable of pulling

quadruple conductors)

y Independent Quality Control system and Material Testing facilities

Specialized skills and software for design and project management


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2.4. MANAGEMENT TEAM

The day to day operations of the Company are looked after by the

Executive Director :- Mr. Manish Mohnot

Managing Director :- Mr. Pankaj Sachdeva

who are assisted by a team consisting of qualified Engineers, Technical Advisors andProfessionals to look after the various aspects of the Organisation.

Mr. D. B. Patel President & CEO (Domestic TransmissionLine Projects)

Mr. B. K. SatishPresident & CEO (Distribution Projects)

Mr. K. K. Jain President & CFO

Mr. Gyan PrakashPresident & CEO (Pipeline Projects)

Mr. N. Sai Mohan

President & CEO (Overseas Projects)

Mr. V. D. Radadia

Sr. Vice President (Production) Mr. M C Mehta

Sr. Vice President (Special Projects) Mr. Anand Chopra

Sr. Vice President (Bio Mass Division)

Mr. M A BaraiyaSr. Vice President (HR & Admin)

Mr. K M ChhajarSr. Vice President (F&A)

Mr. S Ayya DurraiSr. Vice President (Construction)

Management Team Mr. Manish Mohnot - Executive Director

Chartered Accountant and an ICWA having experience of 14 years of consulting in the field of

Oil, Gas, Power and other sectors related to Infrastructure.


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Mr. Pankaj Sachdeva - Managing Director

Bachelor of Electrical Engineering (1982) and PG Diploma in Export Management (1985) with

26 years of experience in Power generation, Transmission & Distribution industry, Project

management and Marketing.

Mr. D. B. Patel - President & CEO (Domestic Transmission Line Projects)

Bachelor of Mechanical Engineering (1980) with over 28 years of experience in Transmission

industry, production and planning.

Mr. B. K. Satish - President & CEO (Distribution Projects)

M. Tech in Civil Engineering (1975) with over 33 years of experience in designing and

marketing for transmission projects.

Mr. K. K. Jain - President & CFOBachelor of Commerce; Chartered Accountant with over 25 years of experience in Finance,

Accounts and Taxation.

Mr. Gyan Prakash - President & CEO (Pipeline Projects)

B. Tech in Electrical Engineering (1979) and MBA (1989) with over 29 years experience in

pipeline industry.

Mr. N. Sai Mohan - President & CEO (Overseas Projects)

Bachelor of Electrical Engineering (1971); (M.I.E.) with over 37 years experience in Turnkey

Projects of transmission line, including Indonesia / Malaysia and Middle East.

Mr. V. D. Radadia - Sr. Vice President (Production)

Bachelor of Mechanical Engineering (1981) with over 27 years experience in Production &

Planning.

Mr. M. C. Mehta - Sr. Vice President (Special Projects)

Bachelor of Civil Engineering (1977) with over 31 years experience in Transmission line,

Testing and Project Planning.


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Mr. Anand Chopra - Sr. Vice President (Bio Mass Division)

Bachelor of Commerce (1975); CA (Inter) (1978) with over 25 years experience in commercial

matters.

Mr. M A Baraiya - Sr. Vice President (HR & Admin)

Bachelor of Social Science (1983) and Master of Social Work (1985) with over 23 years of

experience in Strategic HR.

Mr. K M Chhajar - Sr. Vice President (F&A)

Bachelor of Commerce (1971); Chartered Accountant (1974) with over 34 years of experience in

Finance & Accounts.

Mr. S Ayya Durrai - Sr. Vice President (Construction)

MA ; PGDBM.

Company Secretary: - Mr. Bajrang Ramdharani

Auditors: - M/s. Kishan M. Mehta & Co., Ahmedabad

M/s. Deloitte Haskins & Sells, Ahmedabad

Legal Advisor: - M/s. Singhi & Co., Ahmedabad

Bankers:- Indian Bank

Oriental Bank of Commerce

Union Bank of India

State Bank of India

Exim Bank

ICICI Bank Ltd.

HDFC Ltd.

IDBI Bank Ltd.

Standard Chartered Bank

BNP Paribas, Abu Dhabi

Commercial Bank ofKuwait


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2.5. AWARDS & RECOGNIZATION

y June, 2008 - Kalpa-taru bags Exporter Excellence and Emerging Exporter Award

from Dun & Bradstreet.

y Both Kalpa-taru Power Transmission Ltd.& JMC have won accolades.

Kalpa-taru Power Transmission Ltd., has been adjudged the Best emerging value

creator (Mid-Size Companies) runner up for Outlook Money - NDTV Profit Awards

2007.

JMC was ranked as the Best Wealth Creator among the Construction companies

by Construction World in November, 2007 issue.

y August, 2007 - Kalpa-taru Power listed in India's most investor-friendly companies -

Business Today

y Mumbai , April, 2007 - Business Today rates Kalpa-taru Power as fastest growing Mid-

Cap Company of India

y In the august presence of Hon. Chief Minister of Gujarat Shri Narendrabhai Modi, our

Senior Vice President Shri Kamal Jain signed an MOU for further investment in a new


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Tower Fabrication Plant at Gandhinagar & Pipeline equipments during the Vibrant

Gujarat - Global Investors Summit on 13th Jan, 2005.

y The company was awarded the All India Trophy for highest exporter in the category tonew / Difficult markets - Non SSI" for the year 2001 - 2002, along with the certificate of

Export Excellence in recognition of our achieving highest exports during 2002-03 among

Non SSI units in the field of fabricated steel structures including T/L Towers. The awards

were presented to our Shri R.K. Goel by the Hon. Minister for Industry & Commerce

Shri Kamal Nath in an award ceremony at Kolkata on 12th January, 2005.

y Shri Mofatraj P. Munot, Director of the Company receiving Certificate of Merit from

the Hon'ble Prime Minister of India Shri Atal Behari Vajpayee on May 8, 2000 at

New Delhi for Company's Meritorious Export performance in fabricated steel towers

including transmission line towers during the year 1998-1999. Also seen are Hon'ble

Minister of Commerce, Government of India, Shri Murosali Maran and Commerce

Secretary, Shri Thiru P.P.Prabhu.

y Trading House Status by Ministry of Commerce, Government of India.

y First Indian Power Transmission Company to receive ISO 9001 certification (since 1994and valid till December, 2009).

y Winner of Awards for Export Performance from Engineering Export Promotion Council

(EEPC) in 1995-96, 1997-98 and 1998-99 & 1999-2000.


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y Excellence Award for second highest number of containers ICD- Sabarmati, Gujarat

exported in Western India by CONCOR for 1998-99 and 1999-2000.

y Hon'ble Minister of State for Power, Mrs. Jayawantiben Mehta lighting the inaugural

lamp at the Company's Research and Development Centre (Testing Station) at Punadra

near Gandhinagar on December 5,1999.

Also seen are Mr. R.P.Singh, CMD - Power Grid Corporation of India and Mr. Nalin

Bhatt, CMD- Gujarat Electricity Board.


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2.6. BUSINESS SEGMENT OF KALPA-TARU

The main business ofKalpa-taru is supplying and construction of tower and

Commissioning of Power Transmission line. Over the years, Kalpa-taru has diversified its

business by way of entering businesses like real estate, pipelines, rural electrification anddistribution, biomass energy, construction and warehousing and logistics.

2.6.1. POWER TRANSMISSION LINE :

Company has / is executing/ executed s various turnkey projects of Power Transmission

line in India and Internationally. Power Grid Corporation is largest client ofKPTL in Power Line

Transmission Business. KPTL primarily work with Power Grid, Various State Electricity Board

like Gujarat, Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu etc.

KPTL had also completed challenging turnkey projects in Algeria, Zambia and Turkey.

KPTL has successfully executed various projects in International market. Recently KPTL had

received Rs 1,650 crore worth of orders in Kuwait and Algeria in the quarter ended March 2009

alone, suggestive of the size of order flows.

KPTL capabilities include designing, testing, fabricating and galvanizing of towers and services

from erection to stringing and commissioning of extra high voltage (EHV) transmission lines of

upto 800 KV. This division has an annual installed capacity for manufacturing transmission

towers and steel structures of 108,000 MTs.


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As a part of Turnkey Project, Company need to design, Construct and Equip a

manufacturing/ business/ service facility and turn the project over to the purchaser when it is

ready for operation for remuneration. To provide End To End Solution to its CustomerKPTL has

its own Design Department.

DESIGN & ENGINEERING:

Kalpa-taru has a modern design with state of the art design capabilities. Almost 30 highly

qualified experienced Engineers attend to every need of design of towers and foundations for

OHL & Microwave towers right from pre-bid stage to post completion for OHL projects. Design

and Engineering Department uses:

3D analysis & design software (STADD III) for optimizing use of Mild Steel and Hightensile Steel.

Automatic generation of shop drawings for fabrication and code generation by 3D

drafting software for CNC operation for manufacturing.

In house software for foundation designing and construction drawings.

In house software for development of sag templates and generation of sag tension charts

for line stringing.

PLSCADD software for development of 3D profile drawing facilitating automatic

checking of clearances, optimization of tower quantities.


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TOWER TESTING:

Kalpa-taru has set up its own Tower Testing Station and R & D Centre in October 1998

at Punadra close to Gandhinagar. 106 tower tests have already been carried out since then for

various clients including Power Grid Corporation of India and ABB. This Tower Testing Centre

can test up to 800 KV double circuit towers with a base width of 27 mts x 27 mts (both square or

rectangle) and a maximum weight of 85 MTs and height of 70 Meters. Along with the

sophisticated state-of-the-art equipment, today it ranks amongst one of the largest and best of its

kind in India and across the world.


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2.6.2. OIL & GAS PIPELINE

The company has entered into EPC Contracting of Cross Country Gas & Oil

Pipelines since 2004.

After the Oil & Gas sector has been opened up in India, and the demand of energy per

capita has been rising steadily with the growth in economy, the demand of Pipelines for natural

gas and petroleum products in India has been witnessing a spurt. The phenomenon has been

replicated in many parts of world and as a result, more and more pipelines are being set up in

various parts of the world to facilitate transport connectivity between farthest point to the source.

Natural gas has emerged as the dominant source of additional energy in world. There

exists a huge deficit of natural gas based on current production and demand data in India. While

additional gas quantities, almost equal to existing gas production in the country, are in an

advanced stage of preparation to be made available through LNG and new gas finds, the

infrastructure to transport this gas to demand centers is required to be augmented and partly built

afresh. It is projected that an estimated 5,000 kms of big-inch gas pipelines will be set up in next

3-5 years in India.

Although almost 4,000 Kms of new pipelines have been built in India in the last 3-4

years, the pipeline network available in India today is still inadequate to transport the natural gas

& petroleum products to demand centers in an efficient, safe and environment friendly way. To

meet the growing demand and in view of the awareness of people towards environment, it is

projected that over 2,000 kms of product and crude oil pipelines will be built in next 4-5 years.


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Kalpa-taru has over the last 5 years built a full-fledged organization to take forward our

Pipeline business, led by highly experienced and competent persons, who are well-respected in

the pipeline industry in India. More & more internationally experienced & qualified

professionals are joining the division regularly making it a formidable contender in the industry.

Along with a well experienced team, the company has made large investments in

specialized pipeline equipments to sieze the opportunity available in the EPC contracting of Oil

& Gas pipelines for clients such as GAIL, IOCL, HPCL, BPCL, GSPC, Reliance, HMEL etc in

India and for PDO, OGC, ADNOC, DEPA, ARAMCO & Petronas etc. internationally.

Kalpa-taru lays down very high emphasis on health, safety and environment aspects

besides high standards of quality to be maintained in accordance with companys Safety &

Quality Policy and manuals. Due to continued training and unabated surveillance of

implementation of safety practices at site, Kalpa-taru has clocked over 15 Million man-hours at

various projects in the last 5 years without a single Lost time Injury (LTI).

As a strategy, we have set up a Welders training center at Gandhinagar, where we bring

qualified young welders and train them up for cross-country operations and down-hill welding.

They form a reserve pool for us to draw from for our various projects. These welders are trained

for zero defect welding. We have on our rolls a large number of other skilled personnel from

other pipeline disciplines, who are also regularly trained and kept in reserve.

BREAKTHROUGH ACHIEVEMENTS

In 2006 we completed our first contract for the construction of 16 dia x 386 Kms and 8

dia x 56 Kms product Pipeline from Laban (nearKota) to Bijwasan (Delhi) for Bharat Petroleum

Corporation Ltd. (BPCL) worth Rs. 830 Million (USD 17 Mn). The contract was secured by the

companys International Pipeline partner, who bid for the Project with our support and was

executed on EPC basis by Kalpa-taru as back to back contractor.

We have also completed a 18" x 110 kms gas pipeline from Vijaipur to Kota from GAIL

in Feb, 2007, followed by a prestigious Rs 1.8 Bn (USD 36 Mn) project from Panvel to Dabhol

(Part B) of 30" x 74 kms Pipeline running through a hostile rocky & mountainous terrain from

GAIL, which was successfully completed on schedule in 2007. Both these projects were

executed on EPC basis in consortium with our International partner.


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Kalpa-taru is at an advanced stage of completion for an EPC contract of 427 kms, 24"

crude oil pipeline in Madhya Pradesh for the Vadinar-Bina Pipeline Project of Bharat Oman

Refinery Ltd. having estimated contract value of Rs.1.40 Billion (USD 28 Mn). This project is

scheduled for completion by April, 2009.

The company has also completed another contract of Rs. 270 Mn (USD 5.5 Mn) from

Reliance for its 28" Spur gas pipeline in Gujarat.

Currently, Kalpa-taru has four ongoing projects A prestigious 48 dia high pressure gas

pipeline project of GAIL running through rocky terrain over 165 Kms at an estimated contract

value of Rs. 2.40 Billion (USD 48 Million) scheduled to be completed in Oct.2009; A prestigious

48/28/30 dia crude oil pipeline of Hindustan Petroleum-Mittal Energy Limited running

through marshlands of Gujarat and desert lands of Rajasthan over 550 Kms. At an estimated

contract value of Rs.3.85 billion (USD 77 Million), scheduled for completion in Sept., 2010; A

30 gas pipeline of Indian Oil Corporation Limited from Dadri to Panipat over 130 Kms, at an

estimated contract value of Rs.520 million (USD 10 Million), scheduled for completion in June

2009; A 12x 145 kms product pipeline from Chennai to Bangalore for IOCL at an estimated

contract value of Rs.287 million (USD 6 Million), scheduled for completion in Nov. 09.

The company has created a large pool of specialised pipeline equipment consisting of

Pipe layers, multiple Boring Machines, Bending Machines, Dozers D8/D7/D6, Excavators,

Welding Machines, etc., which augmented by readily available equipment on rent from local

sources, can be deployed to carry out Pipeline Construction work in 8-10 spreads on 5-6

concurrent projects. The professional manpower pool with the company is today ready to

simultaneously implement several EPC cross country pipeline projects with full competence and

desired deliverability.

Cheers to our Pipeliners for having completed over 1,000 kms of challenging pipeline

jobs in less than 4 years of operations.


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2.6.3. BIO-MASS ENERGY:

The company has diversified into Power Generation using renewable/non conventional

energy sources such as agricultural waste and crop residues (biomass) in the State of Rajasthan.

The Company has set up two nos. of 7 MW (Net) power plant in Padampur, GanganagarDistrict in September 2003 and at Uniara, Tonk district, Rajasthan in Nov, 2006 and has invested

approx Rs 700 Million (USD 17 Mn) in the state of art equipments.

The plants uses biomass (mustard crop residue / cotton sticks) and has established

infrastructure / logistics enabling it to collect over 75,000 MTs last year. Based on firsthand

experience and holding of buffer stocks, the company foresees no biomass collection risks in

Ganganagar.

Kalpa-taru Power achieved a rare distinction being one of the first 3 companies in the

world to deliver verified CER (Certified Emission Reduction) generated from our Ganganagar

Plant, which was amongst the first 3 projects in India to be registered with UNFCCC.

Power Purchase Agreement (PPA) and Power Wheeling Agreement have been signed

with Rajasthan Vidyut Prasaran Nigam (RVPN) and 3 Distribution companies of Jaipur, Jodhpur

& Ajmer based on the Rajasthan State Policy of Non-Conventional energy. Third party sale to

Large Industrial Customer is also permitted as per existing Policy & Regulatory guidelines. The

Plant sale will be approx. 90 million units/kHz in 2007-08 to the Rajasthan Grid with timelypayments.

Besides being environment friendly, the Project is expected to contribute to the prosperity

and sustainable development of the region, besides generating local employment opportunities.


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2.6.4. CIVIL CONSTRUCTION:

KPTL entered the civil construction segment in 2005 by acquiring a controlling stake in

JMC Projects India (JMC), after which the latter became its subsidiary. KPT currently it holds

52% stake in JMC, which is a civil construction company having experience in execution ofprojects such as buildings, software parks, factories, roads, bridges and metro stations. It also has

marginal presence in the mining and quarrying business.

It employs over 900 people and has a fleet of Plant & Machinery. JMC had reported

strong consolidated revenue of Rs 1311.95 Crores (US$257 Million) in 2008-09 as annualised

rise of 43 % as against Rs 918.47 (US$180 Million) in 2007-08.

Some of its valued customers include Bajaj Auto, Coca Cola, Asian Paints, Power Grid,

Infosys, Wipro, IIM Ahmedabad and many more. JMCs edge has been its quality and

commitment to timely execution. It has also entered into construction of Express Ways, Roads &

Bridges.

Currently JMC has a order book in excess of Rs 2200 Crores as on 31st march 2008-09.


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2.6.5. RURAL ELECTRIFICATION AND DISTRIBUTION:

Foraying into rural electrification and distribution was a gradual step that KPT took to

grab the opportunities presented by the government/distribution utilities with initiatives such as

the Accelerated Power Development and Reform Programme (APDRP) and the Rajiv GandhiGrameen Vidyut Yojana (RGGVY). The company provides EPC services for distribution

projects of 11/33 KV lines and substations.

Given the tremendous thrust of 11/33 Kv Electrification projects under the APDRP

Schemes, the company has already secured over Rs. 700 Million worth orders. The companys

expertise in project management, sourcing and turnkey execution will prove vital for this newarea of business which holds tremendous promise.


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2.7. GROUP COMPANIES:

Established over 3 decades ago in 1969 by Mr. Mofatraj P. Munot, a first generation

entrepreneur. The Group employs over 4,000 people. Kalpa-taru borrows its name from the

ancient Indian mythological tree - the Kalpa-Vruksha -beneath which all wishes are fulfilled.

Kalpa-taru Ltd.

Property Solutions (I) Pvt Ltd. (PSIPL)

JMC Projects (India) Ltd.

Caprihans India Limited

Shree Shubham Logistics Ltd.

2.7.1. KALPA-TARU POWER TRANSMISSION LTD.

The group's flagship company, Kalpa-taru Ltd. is a leading real estate developer with

premium residential and commercial complexes in Mumbai and Pune.

Pioneering the concept of creating lifestyle living, it has built more than 75 landmark

edifices in the last 39 years. With a team of 1,000 dedicated, Kalpa-taru has created an

incomparable brand and reputation for itself in the Property Development and Real Estate

industry.

We pride at being one of the largest Property Groups in India, with development of over1.5 Million sq.ft at any point of time.

Every Kalpa-taru project reflects a "no compromise" attitude; one that manifests in the

architecture, engineering and construction of every project; from towering structures to


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expansive complexes, Kalpa-taru has proven its commitment and expertise in every segment of

property development.

The residential complexes are replete with landscaped gardens, swimming pools,

gymnasium, tennis and squash courts, clubhouses and several innovative amenities.

In an age where architecture is mainly utilitarian, Kalpa-taru endeavours to combine the

functional with the aesthetic and maintains the highest standards of quality right down to the last

detail.

2.7.2. JMC PROJECTS (INDIA) LTD.

We have forged a strategic alliance with JMC Projects (India) Ltd by acquiring

controlling equity stake (51%+) in Feb, 2005.

JMC Projects is one of the leading Civil Contractors in the field of Construction.

Commercial / Residential Buildings, Software parks, Industrial structures / Factories,Infrastructure projects like Roads, Bridges, Underpass, Metro Stations etc. It employs over 2,400

people and has a fleet of Plant & Machinery.

Its revenue for the period ended March, 2008 was in excess of Rs 9 Billion (USD 225

Million) and likely to cross Rs. 13.5 Bn (USD 337 Mn) in 2008-09.

JMC is one of the successful turnaround & growth stories in the civil engineering sector

(from Rs. 1.80 Bn to Rs 13.5 Bn in only 4 years) and is poised to become one of the fastest

growing small cap companies of India.


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2.7.3. SHREE SHUBHAM LOGISTICS LTD.

Shree Shubham Logistics Limited was incorporated in January, 2007, and subsequentlyconverted into a Public Limited company in April, 2007.

SSLL is a subsidiary ofKalpa-taru Power Transmission Limited (KPTL). KPTL holds

around 80% stake in the company.

SSLL is created to serve the needs of Agri and Non-Agri Commodity Storage in best

practice ambient and temperature-controlled warehouses across major markets in North, South

and West India.

The main objectives of SSLL is to offer end-to-end logistics solutions with a pan-India

presence, to all the commodity stake holders in the agricultural and non-agricultural segment

including, but not limited to warehousing, cold storage services, and third party logistics (3PL),

across the country.

SSLL plans to develop over 41 Global Standards Agri-Logistics Parks at strategic Mandies located in 11

states within a span of three years. In the first phase of operations, SSLL has commenced construction of

11 Agri Logistics Parks which include 3 Cold Stores, creating a capacity of about 200,000 Metric Tons for

Dry storage and over 32,000 Metric Tons for Cold Storage.

2.7.4. PROPERTY SOLUTIONS (I) PVT LTD. (PSIPL)

PSIPL is one of India 's premiere Integrated Facility Management companies and has

recently forayed into Project Management Services, founded in 1999, as a business division of

the renowned Kalpa-taru Group of Companies, PSIPL currently manages over 18 million square

feet of property in Mumbai, Pune, Baroda, Hyderabad, Bangalore, Chennai & Delhi.

Service Expansion Programs, Quality Assurance Standards, Focused Recruitment and

most important of all Customer Satisfaction are aspects that make PSIPL a leader in the field of

Integrated Facility and Project Management Service in India.


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PSIPL is dedicated to managing all projects to international standards and is backed by a

strong in-house team of Professionals. Each of the properties managed by PSIPL is serviced and

administered by technically qualified personnel.

With dedicated and well-trained team of people, strong knowledge base and documented

systems and processes, PSIPL is committed to adhering to a policy of quality, safety and

continuous improvement, offering you a flexible range of services as an integral part of your

business, enabling you to concentrate on your core business.

2.7.5. CAPRIHANS INDIA LIMITED

Caprihans India Limited is a Joint venture between the Kalpa-taru Group and EVC

International N.V. Caprihans is a Public Limited Company with shares listed on Mumbai andDelhi Stock Exchanges. As on date, the USD 1 Billion EVC Group holds 51% of the equity

while the Kalpa-taru Group owns 22%, balance being held by the Public. The EVC Group is the

largest PVC Polymer producer and the 2nd largest PVC Films producer in Europe.

Caprihans is the market leader in the field of Flexible and Clear PVC films and sheeting,

Pharma and Thermoforming grade Rigid PVC Films (Blister) and Extruded hollow corrugated

PP sheets with an all-India network of offices, depots and dealers. The company employs over

400 people and a turnover of approx. Rs.1.20 Billion (USD 26 Million) in 2003.

The Company has two manufacturing facilities located at Thane and Nashik

(Maharashtra) and operates 4 calendars and 3 sheet-line extruders of capacity 20,000 MTs per

annum and 3,000 MTs per annum respectively.


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2.8 OVERSEAS COMPETITION MATRIX

COUNTRY FAR

EAST

MIDDLE

EAST

NORTH

AFRICA

E / W

AFRICA

REST

AFRICA

SOUTH

AMERICA

INDIAN

CHINESE

LOCAL

W. EUROPE

E. EUROPE

KOREA

JAPAN

SAUDI


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3.1. INTERNATIONAL TRADE :

International trade is exchange of capital, goods, and services across international

borders or territories. While international trade has been present throughout much of history its

economic, social, and political importance has been on the rise in recent centuries.Industrialization, advanced transportation, globalization, multinational corporations, and

outsourcing are all having a major impact on the international trade system. Increasing

international trade is crucial to the continuance of globalization. International trade is a major

source of economic revenue for any nation that is considered a world power. Without

international trade, nations would be limited to the goods and services produced within their own

borders.

International trade is in principle not different from domestic trade as the motivation andthe behavior of parties involved in a trade does not change fundamentally depending on whether

trade is across a border or not. The main difference is that international trade is typically more

costly than domestic trade. The reason is that a border typically imposes additional costs such as

tariffs, time costs due to border delays and costs associated with country differences such as

language, the legal system or a different culture.

International trade uses a variety of currencies, the most important of which are held as

foreign reserves by governments and central banks. Here the percentage of global cumulative

reserves held for each currency between 1995 and 2005 are shown: the US dollar is the most

sought-after currency, With the Euro in strong demand as well.

Another difference between domestic and international trade is that factors of production

such as capital and labor are typically more mobile within a country than across countries. Thus

international trade is mostly restricted to trade in goods and services, and only to a lesser extent

to trade in capital, labor or other factors of production.

3.1.1. THERE ARE TWO TYPE OF INTERNATIONAL TRADING IS

DOING BY THE KALPA-TARU. :

1. Turnkey Project Contract.

2. Pure Supply Contract.


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1. TURNKEY PROJECT :

Turnkey project means completion of entire project (specified by purchaser) including

supply of each and every items and services including construction required for completingproject in ready to use stage.

In case of turnkey project, the Purchase just need to Turn the Key to start use of thing /

product / project ordered.

In case of turnkey project, contractor takes full responsibility for completion and

functioning of agreed facilities.

Project can be defined as a discrete package of investments, services and other

actions designed to create within a designated period of time capital assets that produce

benefits for the client over an extended period of time.

2. PURE SUPPLY CONTRACT :

In supply Contract Company have to doing an only supply of the product. Company has

to produce the product and supply as per the requirement of the customer. Their responsibility is

completed after completion the supply of the raw material. There not other services are included

like construction of transmission line.

There are two type of supply contract.

1. With design

2. Without design


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3.1.2. INTERNATIONAL TRADE TRANSACTIONS AND

COMPLEXITIES

Compared to local trade, International Trade has many complexities. This may be due to

the following reasons: Buyer and seller separated by long distance and may not know each other.

Buyer and seller are residing in two different countries which are two different

sovereign political entities.

Buyer and seller are governed by two different legal systems.

Currencies of buyer and seller are different.

Buyer and seller are governed by different trade and exchange regulations.

METHODS OF SETTLEMENT

The more popular methods of settlement and advantages/reasons thereof are summarized below:

Cash in Advance or Clean Advance

Payment by Letter of Credit

Documentary Collection Open Account Payment or Deferred Payment

CASH IN ADVANCE OR CLEAN ADVANCE:

Seller may not trust buyer and insists upon payment in advance and ships the goods

thereafter. Buyer has trust in seller, pays for the goods in advance and waits for documents

(goods).

PAYMENT BY LETTER OF CREDIT:

Seller gets his payment as soon as he ships the goods and produces the necessary

documents in compliance with the conditions. He has the guarantee of a bank for his payment.


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Buyer requests his bank to pay or arrange to pay seller after he ships goods and presents the

requisite documents in compliance with his buyers requirements. It also includes Buyers credit.

DOCUMENTARY COLLECTION:

Seller relies on buyer and agrees to ship the goods and to receive payment after

documents reach the buyer. Buyer may not trust and agrees to pay only after he ships the goods

and sends the relevant documents i.e. takes documents and pays.

OPEN ACCOUNT PAYMENT OR DEFERRED PAYMENT:

Seller has more trust in buyer and ships the goods, allows buyer to use the goods and pay

for them at a later date.

Buyer enjoys the confidence of seller and receives goods when he agrees to pay on a pre-

agreed date.

INCOTERMS:

Incoterms are standard trade definitions most commonly used in international sales

contracts. Devised and published by the International Chamber of Commerce, they are at the

heart of world trade. Among the best known Incoterms are EXW (Ex works),FOB (Free on

Board), CIF (Cost, Insurance and Freight), DDU (Delivered Duty Unpaid), and CPT (CarriagePaid To).

ICC introduced the first version of Incoterms - short for "International Commercial

Terms" - in 1936. Since then, ICC expert lawyers and trade practitioners have updated them six

times to keep pace with the development of international trade. Most contracts made after 1

January 2000 will refer to the latest edition of Incoterms, which came into force on that date. The

correct reference is to "Incoterms 2000". Unless the parties decide otherwise, earlier versions of

Incoterms - like Incoterms 1990 - are still binding if incorporated in contracts that are unfulfilled

and date from before 1 January 2000.

Incoterms are categorized in to four different categories, each denoted by a different

letter:


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E, F, C, and D. Each letter category explains how much the buyer or the seller

responsible will be taken on by the respective parties:

E terms:

There is only one term in this group and it requires little or no accommodation by the exporter.

F terms:

Terms in this group is where the main carriage is not paid, but the exporter is responsible for, and

at risk, until delivery to carrier.

C terms:

The main carriage is paid by the exporter, but without risk or loss after shipment or delivery.

D terms:

The exporter pays all fright and bears all risks until arrival of the goods at named destination, in

this group.

There 13 Incoterms which are as follows:

EXW- EX WORKS

Ex works means the sellers only responsibility is to make the goods available at thesellers premises, i.e. the works or factory. The seller is not responsible for loading the goods on

the vehicle provided by the buyer unless otherwise agreed. There is no control over the final

destination of the goods. The buyer bears the full costs and risk involved in bringing the goods

from there to the desired destination. Ex works represents the minimum obligation of the seller.

FCA- FREE CARRIER

The seller hands over the goods, cleared for export, into the custody of the first carrier(named by the buyer) at the named place. This term is suitable for all modes of transport,

including carriage by air, rail, and road. When used in trade terms, the word "free" means the

seller has an obligation to deliver goods to a named place for transfer to a carrier.


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If no premise place can be named at the time of the contract of sale, the parties should

refer to the place where the carrier should take the goods into its charge. The risk of loss or

damage to the goods is transferred from seller to buyer to that time not at the ships rail.

The term carrier means any person by whom or in whose name a contract of carriage

by road, rail, air, sea, or a combination of modes has been made. When a seller has been

furnished a bill of lading, way bill or carriers receipt, the seller duly fulfills its obligations by

presenting such a document issued by a carrier.

FAS- FREE ALONGSIDE SHIP

The seller must place the goods alongside the ship at the named port.It suitable for

maritime transport only.Alongside" means that the goods are within reach of a ship's lifting

tackle. When used in trade terms, the word "free" means the seller has an obligation to delivergoods to a named place for transfer to a carrier.

FOB- FREE ON BOARD

It is the classic maritime trade term. The seller must load the goods on board the ship nominated

by the buyer, cost and risk being divided at ship's rail. The seller must clear the goods for export.

Suitable for maritime transport only. The seller pays the cost of loading the goods.

CFR- COST AND FREIGHT

Seller must pay the costs and freight to bring the goods to the port of destination.

However, risk is transferred to the buyer once the goods have crossed the ship's rail. Suitable for

maritime transport only

The seller has to arrange for the carriage of goods by sea to a port of destination, and

provide the buyer with the documents necessary to obtain the goods from the carrier. Under

CFR, the seller does not have to procure marine insurance against the risk of loss or damage to

the goods during transit.

CIF- COST, INSURANCE AND FREIGHT

Exactly the same as CFR except that the seller must in addition procure and pay for

insurance for the buyer. The seller must contract with the insurer and pay the insurance premium.


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Insurance is generally more important in international shipping than domestic shipping, because

U.S. laws generally hold a common carrier to be liable for lost or damaged goods. The seller has

to arrange for the carriage of goods by sea to a port of destination, and provide the buyer with the

documents necessary to obtain the goods from the carrier.

CPT-CARRIAGE PAID TO

The seller pays for carriage to the named point of destination, but risk passes when the

goods are handed over to the first carrier. Accordingly, freight/carriage paid to can be used for

all modes of transportation, including container or roll-on roll-off traffic by trailers and ferries.

The price invoiced or quoted by a seller does not include insurance cost, but includes all

other charges up to a named place of destination (usually the buyer's warehouse). In comparison,

cost and freight (C&F) terms include transport charges only up to a named port of destination.

CIP- CARRIAGE AND INSURANCE PAID TO

In CIP, the seller/exporter arranges for the goods to be delivered to the named port of

destination. Similar to CPT, the sellers risks do not end until the moment the goods have been

delivered to the carrier, but typically do not end until the carrier reaches the agreed destination.

Because this incoterm can be used for any mode of transport, a carrier in this case could be a

steamship line, a trucker, a railroad, or a freight forwarder.

The seller is responsible for all costs until the goods have been delivered to the named

port of destination. In this case, the named port of destination is domestic to the buyer, meaning

that the named port must be a port in the buyers country, however unlike other similar

Incoterms the named port of destination is not necessarily the final delivery point: it could be, but

it could also be an agreed upon point at the port of destination.

DAF- DELIVERED AT FRONTIER

This term can be used when the goods are transported by rail and road. The seller pays

for transportation to the named place of delivery at the frontier. The buyer arranges for customs

clearance and pays for transportation from the frontier to his factory. The passing of risk occurs

at the frontier.


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The seller has to deliver goods to a named destination, usually a border location, by a

predetermined time. Up to the border, the seller is responsible for all risks and expenses

associated with the delivery.

DES- DELIVERED EX SHIP

Where goods are delivered ex ship, the passing of risk does not occur until the ship has

arrived at the named port of destination and the goods made available for unloading to the buyer.

The seller pays the same freight and insurance costs as he would under a CIF arrangement.

Unlike CFR and CIF terms, the seller has agreed to bear not just cost, but also Risk and

Title up to the arrival of the vessel at the named port. Costs for unloading the goods and any

duties, taxes, etc are for the Buyer.

DEQ- DELIVERED EX QUAY

In international trade, it is a contract specification where the seller must deliver the goods

to the wharf at the destination port. Delivered ex quay may be noted as having duty paid or

unpaid. If it is marked as paid, the seller is responsible for any costs, such as duty, and risks

associated with the delivery. The buyer must pay the costs and duty when the DEQ is marked as

"duty unpaid."

Delivered ex quay is an alternative to delivered ex ship (DES). With a DES specification,the seller must make the goods available on board a ship at the destination port. DEQ changes

the specification, noting that the goods must be delivered to the wharf.

DDU- DELIVERED DUTY UNPAID

This term means that the seller delivers the goods to the buyer to the named place of

destination in the contract of sale. The goods are not cleared for import or unloaded from any

form of transport at the place of destination.

The buyer is responsible for the costs and risks for the unloading, duty and any

subsequent delivery beyond the place of destination. However, if the buyer wishes the seller to

bear cost and risks associated with the import clearance, duty, unloading and subsequent delivery

beyond the place of destination, then this all needs to be explicitly agreed upon in the contract of

sale.


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DDP- DELIVERED DUTY PAID

A transaction in which the seller must pay for all of the costs related to transporting the

goods and is responsible in full for the goods until they have been received and transferred to the

buyer. This includes paying for the shipping, the duties and any other expenses incurred while

shipping the goods. This type of delivery agreement places all of the risks and costs with the

seller of the good until delivery is made. If the goods are damaged or lost in transit, the seller

will be responsible for the costs.


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3.2. TENDER

When company wants to buy &sale something. Company invites buyer / seller through

tender KPTL make a transmission tower & sells as per order. Company makes a tender for order.

Tender is document and tendering is a process. Tender Contains details of items to be purchased

Tender has lowest price then company gets Work order and contract done between purchaser and

organization( seller ).

DETAILS CONTAINS FOLLOWING :

Item name

Item description Quantity/price

Supply

Destination details etc.

TECHNICAL SPECIFICATION :

Technical specification done by purchaser

Specification

Ground wire

Conductor

Insulator

Amendment if any

Negotiation done between purchaser and seller.


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3.2.1. TENDER PROCESS

PURCHASER PUBLISHES NOTICEINVITING TENDER

PURCHASE ISSUES TENDERS TOVENDERS

PURCHASER RECEIVES FILLEDTENDER FROM VENDERS

TENDER OPENING BY PURCHASER

PREPARATION OF COMPARATIVESTATEMENTS CONTAINING PRICE

MODE OF SUPPLY DISCOUNT

INSURANCE ETC.

FINALIZATION & SELECTION OFVENDER

ISSUING PURCHASE ORDER TOVENDER


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DELIVERY:

Material is dispatched to various destinations as per dispatch instruction provided by

marketing department separate dispatch challans are prepared from each dispatch giving

item number, quantity and weight as per format.

List of items inspected and cleared by client is maintained and updated in computer Data

bank and this forms the basis and authority for affecting.

All reasonable care is taken to see that material does not get damaged while in transit and

that the right quantity as per challan is delivered.

If any case any item is damaged and the customer informs about, it this is replenished.

Such case is rare.

All records are maintained in project.

3.2.2. GENERAL CONDITION OF A CONTRACT:

Scope of work

1. TRANSMISSION LINE.

Route survey. Tower spotting, optimization of tower location soil testing, etc.

Erection of tower

Fabrication and supply of all type of transmission line, tower & line materials.

Design selecting type of foundation for tower

Testing of tower.

2. SUB-STATION

The work covered in this package design of sub-station layout, detailed engineering,

manufacture, testing and supply of all sub-station equipment along with election, & testing of the

equipments & their protection for 220 KV & 132 KV sub-stations.

The completion time for respective package is as per term and condition of tenders. Bid

document are not transferable. Bid document will not be sent by post.


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3. EARNEST MONEY DEPOSIT ( BID GUARANTEE )

The bid must be accompanied by earnest money deposit ( EMD ) as bid guarantee failing

which the bid shall be non-responsive and hence rejected.

In the form of irrevocable bank guarantee for the amount specified against each package

issued by any scheduled bank in Indian in favor of client or customer.

4. QUALIFICATION OF BIDDERS.

The Bidder must have to meet the following conditions against respective packages:

o Financial Capability.

If a bidder participate in more than one package, financial capacity of networth &

average yearly turn-over should meet progressive requirement.

o Technical Capability.

There are two type of technical capability required for tender

Transmission line

Each ofsubstationpackages.

Manufacturing capability

For bidders to qualify for more than one package, the bidder must have the financial and

manufacturing capability not less than the sum of the requirements of the packages in which the

bidder desires to participate.

minimum quantity yearly manufacturingItem Manufacturing in capability

Any year duringlast 5 years.

Each i.r. line transmission 1500 MT 3000 MTPackage tower


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3.2.3 INTRODUCTION TO BIDDERS:

SCOPE OF BID :

Scope of bid means that different work has required different scope of bid in ourcompany scope of bid requirement as per below,

Bids shall be offered for the entire supply, testing, erection & commissioning covered

under each package separately.

FOR TRANSMISSION LINE

Fabrication, galvanizing, shop drawing & shop testing & supply of all types of tower

complete with all components & hardware, river crossing towers, Anchor towers, membersincluding all accessories like number plate, danger plate, anti-climbing device, etc.

y Finishing, painting, packing, transportation, insurance supply & delivery at site of all

materials, accessories.

y Erection of stub of all types of tower.

y Testing & commissioning & handing over of line.

FOR SUBSTATION PACKAGE

Design ofsubstation layout covering the switchyard, infrastructure facilities and sub-

station complex covered under respective sub stations taking reference from bid drawing, supply

of fabricated and galvanized switchyard structure

Design, manufacture, work, testing and supply at site of all control, relay and metering

panels, Testing, commissioning and handling over of sub-station including PLCC.

RESPONSIBILITY OF BIDDERS:

It must be understand and agreed that sub factors have properly been investigated and

considered while submitting the bid.

The bid shall include all the information as per bid documents.


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BIDDING DOCUMENTS:

The set of bidding documents issued for the purpose of bidding includes the volumes

stated below together with addendum any to be issued in accordance.

Documents Constituting the BID

The bid to be prepared & submitted by the bidder shall comprise the following

documents.

Bid security/ earnest money

Technical data.

Price schedules.

The other entire document required to be submitted in accordance with the

instructions to bidders embodied in these bidding documents.

BID PRICES.

The bidder shall quote in the appropriate schedule the proposed bid price for the entire

scope of work covered under the bidding document offer respective lots.

PERIODS OF VALIDITY OF BIDS:

Bids shall remain valid for a period of 300 days after the date set for opening of bid.

EARNEST MONEY (BID GUARANTEE)

The bidder shall furnish bid guarantee in the form of bank guarantee on any Indian

scheduled commercial bank of an amount specified in the invitation to bid in one original & five

copies.


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4.1. PREAMBLE:

Turnkey project means completion of entire project (specified by purchaser) including

supply of each and every items and services including construction required for completing

project in ready to use stage.

In case of turnkey project, the Purchase just need to Turn the Key to start use of thing /

product / project ordered.

In case of turnkey project, contractor takes full responsibility for completion and

functioning of agreed facilities.

Project can be defined as a discrete package of investments, services and other

actions designed to create within a designated period of time capital assets that produce

benefits for the client over an extended period of time.

Due to globalization, markets for turnkey bidders have been widened and which leaded to

cut throat competition.

4.1.1. INTERNATIONAL SCENARIO OF POWER TRANSMISSION LINE

TURNKEY PROJECTS:

In case of power transmission line turnkey projects, international Markets are also

witnessing rapid change in the competition pattern with Indian, Saudi, Turkish and Bosnian

Firms, trying to get a foot hold in many overseas markets directly or as a sub-supplier to leading

MNCs. With the decline in Far East / South East Asian market potential ever since the currency

crisis, African markets are emerging as the favourates destination and Indian firms suffer from

the logistic disadvantage of higher ocean freight rates, as compared to the other competitors from

that region.

Also the local firms who are well entrenched in their respective markets and have beenenjoying local price preferences, offer stiff competition to foreign predators and exert influence

through lobbying with local Govts. for better protection measures to safeguard their citadel.


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The company can develop strategies to overcome these competitive forces through

consortium formation and participation in turnkey projects to have a fair share of the

international market as well.

4.1.2. RATIONALE OF TURNKEY BIDDING

To obtain a contract awarded competitive price to be quoted. To calculate competitive

price levels it is inevitable to collect the correct information. Any error in pricing would be very

crucial. For example, less pricing leads to loss to the company and over pricing get the company

out from competition. Hence, a systematic and precautious approach is essential for bidding to

get a contract awarded.

It is a well-known fact that maximum profit can reap from turnkey project because of itsnature of full scope of work.

Since value of turnkey projects are in crores, award / loss of any turnkey project will have

a major impact on contractors financial condition.

As responsibility for implementing turnkey contract lies with single source, which helps

the scheduling and planning very effectively, Generally turnkey contracts are executed in time if

any delay then there may be huge penalties on total contract value and not on unfinished portion.

By adopting the turnkey project, the client also have various advantages such as co-

ordination with various agencies get minimized and only main contractor is accountable for

entire contract.

4.1.3 TURNKEY PROJECT

Turnkey project means design, engineering, type testing and supply of all requiredmaterials and installation of a project with a single source of responsibility. Turnkey project is

generally adopted in Power Transmission Line, Road construction, rural electrification, rail

electrification, etc. Turnkey Project can be of different types;


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y Full Scope Turnkey Project - Under this scheme prices are to be quoted as per bill of

quantities provided by client. In this case, if there is any change in requirement of

quantities, accordingly contract price is adjusted. In addition to basic price specification

also allows price variation to compensate the cost hike for various inputs. However,

applicability of price variation depends on tenure of the contract, generally for 12 monthcontract prices are fixed at firm basis.

y Lump sum Price Turnkey Project Under this contract, contractor is required to

complete the project at fixed price and there is no adjustment is done for quantities

variation. While bidding this type tender contractor has to take extra precautions to built

up the cost for inputs, which may be required during execution. In Power Transmission

Line case lump sum price means that destination for both the end are decided and if there

is any change in destination, then corresponding to that variation contract price also get

adjusted.

y Complete Scope with Lump sum Price Turnkey Project Under this scheme technical

details for each product are to be designed by the contractor and also estimate all the

required items. Once total amount is quoted there is scope for any adjustments. In this

case contract is required to study the various details in depth before finalizing the price.

y BOOT Route Turnkey Project (Built Own Operate & Transfer) - In this case contractor

execute project with their own money and operate for a specific period and on expiry of

the period transfer the project to clients. Under this project contractor will get monthly

tariff from client. In the prevailing market a good growth is expected for such projects.


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4.2. BIDDING

Submission of offer in line with specification requirement and offer price of all items as

listed out by the purchaser and also any additional items that are envisaged for completing the

project. Generally a check list is prepared to ensure that offer meets all the criteria as per therequirement of technical specification including qualification, etc.

4.2.1. GENERALLY IN TURNKEY BIDDING FOLLOWING TWO

METHODS ARE FOLLOWED:

1. Two Stage Bidding

2. Single Stage Bidding

1. TWO STAGE BIDDING

i) Request for Qualification (RFQ) and Request for Proposal (RFP):

The client invites request for qualification from all interested bidders to know

their technical capabilities and past records. The client evaluate the technical offer on the

basis of decided parameters like average annual turnover, financial capability, past

project experience, manufacturing experience, etc. The short listed bidders / applicantsare then requested to submit their price offer at the second stage.

ii) Two Envelope System

Under this scheme the interested bidders are invited to submit their offer in two

envelopes. First envelope contains techno-commercial offer and second envelope

contains price offer. In this case the price bid is opened only if the bidder is qualified intechno-commercial offer submitted by them.


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2. SINGLE STAGE BIDDING

In this bidding techno-commercial details and price offer are submitted together. Some

of the client opens price offer on due date and then evaluate the details including qualification,

etc. Least evaluated offer is considered for awarding the contract. During evaluation client can

ask clarification / confirmation on any issues and these are to be confirmed within dead line.

Generally, contractor is decided within the validity of the bid and if evaluation could not be

completed then, validity of bid is extended. At this juncture bidders may opt for not to extend,

that means withdrawal of their bid. In this case bids security can be forfeited and the same to be

returned to bidder.

4.2.2. IN TENDER DOCUMENTS INSTRUCTION TO BIDDERS ARE

GIVEN, WHICH NORMALLY COVER FOLLOWING TOPICS:

SCOPE OF BID

The client invites bids for the Construction of works will give scope of work in detail to

be carried out by contractor to avoid any disputes in future.

SOURCE OF FUNDS

Source of fund may be clients own fund or from any funding agencies like, World Bank,

JBIC, Asian Development Bank, etc is mentioned bid document.

ELIGIBLE BIDDERS

Looking to the scope of work the client decides on eligibility criteria of bidder like:

The contractor should be eligible for design, supply, erection, and commissioning ofequipment and material according to companies requirement.

Only government recognized company can participate in bid other non recognized are not

eligible


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QUALIFICATION OF BIDDERS

The bidder who is participating for bidding should have to fill the Qualifi