L&T mulls firms for power equipment, ship building

Larsen & Toubro (L&T) is planning to set up separate companies to pursue its shipbuilding and power equipment manufacturing businesses.

The country's largest engineering company, which aims at generating Rs 8,000 crore in five years from these businesses, will also go for unlocking shareholders' value from these ventures by listing them on the bourses.

Chairman and Managing Director A M Naik had said at the company's annual results press meet that it would finalise the location of setting up a shipbuilding yard for big vessels shortly. It has shortlisted sites for the project, which requires 800-1,000 acres of land. The project is expected to go on stream by March 2010.

L&T now builds ships with a displacement of up to 20,000 dead-weight tonne (dwt) in Hazira, Gujarat. The new yard will construct bigger vessels of 200,000 dwt.

The capital investment for the project is estimated to be around Rs 2,000 crore. The company targeted to generate Rs 3,000-4,000 crore from the shipbuilding business in five years.

Another Rs 4,000 crore is estimated to be generated in the next five years from the power equipment manufacturing business, a new area for the 69-year-old company. It has recently signed two joint ventures, one each with Mitsubishi and Toshiba, to produce supercritical boilers and turbines.

L&T's JV with Mitsubishi Heavy Industries is expected to start manufacturing boilers by the second half of 2008-09.

The JV company will manufacture under licence from MHIL for supercritical pressure boiler technology with generating capacities ranging between 500 and 1,000 mw.

The JV will entail a capital investment of Rs 300 crore "� MHI owning 49 per cent and L&T 51 per cent. The company would begin operations with 50 employees, to be expanded later to about 1,250 once production achieves momentum.