With an aim to capture the growing energy space in India, engineering and construction major Larsen & Toubro (L&T) is targeting its power division to add sales of about $3 billion by 2015 compared to $400 million currently, the company’s CMD AM Naik said.
With the current order book of about Rs 32,000 crore, L&T, in joint venture with Mitsubishi Heavy Industries, on Tuesday inaugurated its facility for manufacturing supercritical boilers and turbine generators at Hazira, Surat. Built at an investment of Rs 4,000 crore, the L&T-MHI facilities at present have an annual capacity to manufacture 5,000 MW of equipment, to be expanded to 6,000 MW by 2012. Naik further revealed that the company is looking at scaling the current order back log of Rs 32,000 crore to Rs 50,000 crore over a period of three years. ?In the next 12 months, we see opportunity for 25-26 boiler-turbine-generator packages. We hope to get orders for 10-12 of these, which would give us fillip for two and a half years,? Naik said.
Says Ravi Uppal, president (power) and member, L&T Board, ?The two JV factories, equipped with state-of-the-art facilities, have been built and put into operation in a record time of 18 months. We currently have an order book of 10,000 MW in both turbine and generators.?
When asked how much would L&T Power contribute to L&T?s total sales in the near future, Uppal,, without giving specifics said, ?L&T Power would be the largest business contributor.? Shares of L&T were marginally up to close at Rs 1,785.50 on the BSE,
According to a recent report by Edelweiss, while L&T is positive on the overall power generation equipment market, it expects to report reasonable profitability once it reaches 55-60% utilisation level at its manufacturing plant for BTG, in the next 2-2.5 years. ?Also L&T believes, players in the BTG market have been behaving rationally, and it has not seen any major price war, which augurs well for the company,? said Amit Mahawar, an analyst with Edelweiss in his report.
Meanwhile, according to the reports, L&T and its peers stand to benefit as the government is taking a stand in favour of super critical technology, as demand for power in India rises. India added only 21,080 MW of power in 2002-2007, about half its target. The Planning Commission, in its mid-term review in March, said 62,374MW would be added by 2012. Following the government mandate, about 60% of the capacity for coal-fired generators will have to use super critical boilers and turbines. For the 12th Plan period, (2012-17), almost 95% of the new capacity will have to come from super critical steam boilers and turbines.