Bharat Earth Movers Ltd (BEML), which recently lost a Rs 1,600-crore-contract to a Chinese firm to manufacture 216 Metro coaches has expressed willingness to reduce its bid price substantially. The offer to the Bangalore Metro Rail Corporation Ltd (BMRCL) for re-negotiating the tender comes at a time when India’s relationship with China is turning sour and India is considering minimising its business ties with China.
Earlier this year, China-based CRRC Nanjin Puzhen Co Ltd emerged as the lowest bidder for manufacturing 216 Metro coaches including 90 CBTC-complaint (communication-based train control) coaches for Namma Metro. The price of Rs 1,578 crore quoted by the Chinese firm had even surprised BMRCL officials as it was Rs 100 crore lesser than their estimates.
The bidding had taken place a couple of months after the CRRC lost a prized contract of Rs 3,849 crore, awarded by the Mumbai Metro, to BEML. For Mumbai Metro, the price quoted for manufacturing each coach by Bengaluru-based BEML stood at about Rs 7.98 crore as compared to the CRRC’s Rs 8.05 crore per coach.
Going by the bidding prices, the Chinese firm appeared determined to win the next major contract, which came from the BMRCL. For Namma Metro, the CRRC quoted just Rs 7.3 crore for manufacturing each coach, while the BEML’s prices were Rs 9.24 crore per coach.
Multiple sources said that BEML quoted much higher for Bengaluru Metro as tender conditions were such. “We could only participate along with a foreign firm. That shot up the tender price as our JV partner had fixed a higher quotation. The technology sought by the Mumbai Metro is the latest and better than Bengaluru Metro but we had no compulsion to have a foreign partner. If this rule can be relaxed, we are willing to reduce our bid price,” a source in the BEML said.
BEML had quoted Rs 1,996 crore for manufacturing 216 Metro coaches, which is about Rs 418 crore more than the Chinese firm’s quote. In all, four companies had participated in the bids. While the Canadian firm Bombardier had emerged the second lowest bidder (Rs 1,801 crore), Alstom India had quoted the highest (Rs 2,052 crore). Experts believe that the CRRC quoted such a low price only to kill the market.
“This is called predatory pricing. The Chinese firms get tax exemptions and various other subsidies to grab contracts outside their country. If they manage to get a few more big contracts in India, it spells the death knell for many Indian companies. Despite no support whatsoever, BEML quoted a competitive price in Mumbai Metro knowing fully well that it’s a risk.
The Chinese firm does not have to worry much. On the other hand, BEML is expected to be a part of the race, while simultaneously being pulled back as it is both a commercial organisation and a PSU,” an industry source explained. Currently, the CRRC has got its foot in the door in the Indian market. The Chinese firm has already won the bids for manufacturing Metro coaches for Noida Metro (76 cars), Mumbai Metro (64 cars), Nagpur Metro (69 cars) and Navi Mumbai Metro (24 cars). Their attempt to win bids from Pune Metro, Ahmedabad Metro and more recently the Kanpur Agra however failed as it did not qualify in the technical rounds.