1. L&T Shipbuilding hopes to break even in two years

L&T Shipbuilding hopes to break even in two years

L&T Shipbuilding, part of $ 17 billion engineering and technology major Larson & Toubro (L&T) is expecting to break-even in another two years' time riding on the anticipated defence orders as well as exports to overseas countries.

By: | Chennai | Published: June 21, 2017 6:28 AM
L&T Shipbuilding, engineering, technology, Larson & Toubro L&T Shipbuilding, part of $ 17 billion engineering and technology major Larson & Toubro (L&T) is expecting to break-even in another two years’ time riding on the anticipated defence orders as well as exports to overseas countries.

L&T Shipbuilding, part of $ 17 billion engineering and technology major Larson & Toubro (L&T) is expecting to break-even in another two years’ time riding on the anticipated defence orders as well as exports to overseas countries. L&T Shipbuilding which is dedicated exclusively for making defence ships, has an accumulated a loss of Rs2, 500 crore on its books. L&T had invested around Rs5,000 crore on its greenfield ship building unit located at Kattupalli, some 40 kms off Chennai in 2012 and over the years, it has turned red. Speaking to media persons on the sidelines of the launch of a floating dock (FDN-2) designed and built for the Indian Navy at Kattupalli on Tuesday, Jayant D Patil, senior vice-president, head, defence & aerospace and member of the board, heavy engineering, Larsen & Toubro, said that the company is likely to wipe out its losses and break-even by FY19 or FY 20, as it is anticipated to get at least four orders from Indian Defence. He said that the company has no plans to invest further on the facility as it had been heavily funded at the time of commissioning. “Now, with defence orders expected to come in by winning tenders this year coupled with some export revenues from Vietnam, we will be able to break-even in two years’ time,” he said. The company expects the losses to come down with utilization going up. It is focusing only on the defence projects including for the Indian Coast Guard and Navy.

In 2016, L&T had bagged major order from Vietnam Border Guard for high speed patrol vessels at cost of $99.7 million, marking the biggest export order given to a private Indian Shipyard. L&T is presently executing ministry of defence contracts for design and construction of 54 interceptor boats (IBs) for Indian Coast Guard, out of which 32 IBs have already been delivered. B Kannan, MD and CEO of L&T Shipbuliding said that the company has posted a sales revenue of Rs700 crore last fiscal. It is participating in four tenders which together are worth Rs50,000 crore. The tenders are expected to be finalised during the current fiscal, which include the Landing Platform Docks (LPD) for Indian defence force. The other projects are development of a diving support vessel, survey vessel and ASW Craft. According to Patil, the Kattupalli facility has a capacity to produce around 110 ships a year once geared up, and the current utilisation is only one fifth of the capacity. The launch of floating dry dock would help to spread awareness about its capabilities to other countries.

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The floating dock, which is the second such facility for the Indian Navy, has been completed at a cost of around R468 crore, while a dry dock would cost around R2,000 crore. The floating dock could be moved through the sea to the location of the ship with a hauling in system to handle a ship’s docking and undocking operations and the FDN-2 would be located near Andaman and Nicobar. The existing FDN of Navy was purchased from an Indian company which was in turn built overseas. The FDN-2, indigenously designed and developed, is 185 meter long and 40 meter wide, and is designed for docking Indian Naval ships and submarines of up to 8,000 tonne displacement with draughts of up to 7 metre, during both day and night. The FDN will be handed over to the Navy by the last quarter of this year. L&T has also been mandated by Indian Coast Guard (ICG) to design and build seven offshore patrol vessels, of which two will be launched in the second half of this fiscal.

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