L&T gets nod to be a submarine builder

Engineering and construction major Larsen & Toubro (L&T) has been accepted by the Indian government as the second manufacturer of submarines in the country after Mazgaon Docks.

The licence will enable the company to be a part of the government's submarine manufacturing programme, for the Indian Navy, to be accomplished by 2025.

The Center has already filed a letter of intent with the Mazgaon Dock for the manufacturing of six submarines of French/ German design.

Further, a need for additional six submarines of Russian design have been identified recently. L&T is currently in an advanced stage of negotiation with the Mazgaon Dock to be a part of this mega project.

PM Mehta, senior vice president operations & member on L&T board said, "We are in talks with the Mazgaon Dock authorities to be a part of the overall submarine manufacturing project. A joint effort by Mazgaon Dock and L&T will enable the total programme to advance at a faster pace."

"This will, in the near future, translate into a business of around Rs 300-400 crore per annum. We have already tied up with Royal Dutch/Shell for its dry dock facility at Hazira," he added.

Mehta, however, refused to comment on the estimated size of the total order expected by L&T, but said that each submarine cost around Rs 1,200 crore.

L&T's defense, nuclear & aerospace business, which is currently in the range of around Rs 250-300 crore, is poised to grow to over Rs 900 crore in the next three years. In 1999, the business had generated just Rs 25 crore.

"We have a order backlog of around Rs 800 crore in the nuclear, defence and aerospace business segment with a delivery period ranging from 18 to 70 months," Mehta added.

The defence, nuclear & aerospace business segment currently accounts for around 25 per cent of L&T's Rs 1,000 crore heavy engineering business. It is expected to account for around 35-40 per cent of L&T's Rs 2,500 crore heavy engineering business by 2007.