Gammon says acquisitions to boost power plant orders

MUMBAI, June 13 (Reuters) - Construction firm Gammon India Ltd (GAMM.BO: Quote, Profile, Research) expects to bid for contracts to build large power projects in India on the strength of its two European acquisitions earlier this week, a top official said on Friday.

"There is huge growth possible in India with 50,000 megawatts capacity to be added over five years. It is important to have boiler and turbine-making capability," Chairman Abhijit Rajan said on an analyst call.

India, which faces peak power shortage of 14 percent, has outlined plans to boost generating capacity by more than half by 2012, to end power shortages. This has led to a flurry of investments in power projects, boosting demand for capital goods firms.

On Wednesday, Gammon acquired majority stakes in Italian turbine makers Sadelmi and Franco Tosi Meccanica for 47.5 million euros. The acquisitions were funded entirely through overseas debt, raised at about 7 percent.

The two companies, with a combined revenue of 210 million euros a year, have total capacity to service projects up to 2,000 MW a year.

Gammon currently gets almost half its revenue from the power segment, most of these for constructing parts of power projects. It will now be able to bring in design and engineering for entire projects, Rajan said.

Subsidiary Gammon Infrastructure Projects Ltd (GAIN.BO: Quote, Profile, Research) holds rights to develop several infrastructure projects, including a few hydro-electric plants.

"We will use the capability for pre-qualification in India. It will also open doors for projects elsewhere in the world," he said.

Sadelmi and Franco Tosi together have an order book of 600 million euros, spread over Europe and Latin America.