L&T aims 20% revenue from power biz in 2 yrs

India's largest engineering and construction company Larsen & Toubro (L&T) aims to earn at least 15 to 20 per cent of its revenues from the power sector within a couple of years, through the engineering, procurement and construction (EPC) of power plants in the country.

Its units for the manufacture of power equipment with Mitsubishi and Toshiba Corporation of Japan are proposed to come up at Hazira in Gujarat by 2009-10.

"At present we have an order book of over Rs 50,000 crore and of this the contribution of the power sector is less than five per cent," Y M Deosthale, whole-time director and CFO, Larsen & Toubro, told Business Standard.

"We aim to increase this share to 20 per cent in one or two years, considering the opportunities for power EPC projects in the country."

It has been reported that the government is considering entrusting L&T with the supply of power equipment for some of its upcoming power projects on a nomination basis.

Currently, public sector Bharat Heavy Electricals (BHEL) is the only company that is eligible to set up power projects on a nomination basis from the government. The government plans to add 78,000 MW of power by 2012, with an investment of over Rs one lakh crore.

Last December, L&T signed an agreement with Mitsubishi Electric Corporation to set up a manufacturing facility for super-critical steam turbine and generators (in the range of 500 MW to 1000 MW) with technology licensing and assistance from Mitsubishi.

L&T will have a majority stake in the proposed power equipment manufacturing facilities at Hazira. "Our investment is likely to be Rs 250 crore, with a majority 51 per cent stake in each of the projects," Deosthale said. The unit will start production by 2010.

The company is also planning a joint venture with Toshiba Corporation of Japan to manufacture boilers required for the power plant.

Deosthale said L&T has planned capital expenditure of Rs 2,500 crore for a steel fabrication yard and manufacturing facility in Oman, electrical equipment manufacturing unit in Coimbatore and a ship building yard in Hazira.

"We will invest at least Rs 1,500 crore this year and the rest may spillover to next year," he said.