?We will invest heavily in high-technology areas?

Engineering and construction company Larsen & Toubro (L&T) is on a major expansion spree. It?s getting ready to tap into the business opportunity once India?s 60,000 mw nuclear capacity addition plan is launched. In an exclusive interview to FE?s Simran Arora, chairman and managing director A M Naik talks about the company?s plans in nuclear energy and investment in new technology. Excerpts:

When are you commissioning your fast breeder reactors?

We got involved in fast breeder reactors a few years ago and we did nearly two-third of the work. Currently, it is being assembled at the atomic power station in Kalpakkam and I hope that it will get commissioned by 2011 and we will go critical. It will be a major development in India?s nuclear story.

How are you prepared to tap the opportunities arising out of the Indo-US nuclear deal?

As you know we have signed the agreement, but the negotiations are still going on with the US on some of the sensitive issues like reprocessing plant and so on. Once they are all signed, the deadline for which in August 2010, the real action will start.

To meet with those challenges, L&T had created special facilities for nuclear reactors that weigh 900 to 1,000 tonnes. In fact, we are manufacturing reactors for the refinery at Hazira for export market, which weigh up to 1,500 tonnes. Apart from setting up a new nuclear reactor shop at Hazira in Gujarat, we are also spending more than $500 million to set up a new forging shop meant for nuclear reactors and associated equipments for other industries. It will also be ready in 2011, which will coincide with the manufacturing that has to begin for the reactors of PWRs. Each one is about 1,000 to 1,650 mw.

What is L&T?s capacity as far as nuclear power plants are concerned?

We can build nuclear plants that have the capability to produce 3,000-4,000 mw every year (3 to 4 Reactors per year).

Who all are you in talks with to build nuclear reactors?

We are in talks with Canadian nuclear firms to build reactors. We are in talks with other players as well. L&T has entered into MoUs with almost all technology players.

What is the progress of your talks with Atomic Energy of Canada?

Atomic Energy of Canada has designed 1,165 mw reactors and those are under licensing, but will get approved shortly within a year or two. They are looking forward to cooperate with L&T to set up those and in fact they are sure that L&T will be more competitive in building those reactors for exports. I don?t want to get that ambitious at this point because a lot more has to happen before we can do that.

What is the progress of your discussion with French technology firm Areva on nuclear power plant development?

L&T has already entered into agreements with four major global vendors of nuclear power equipment and has also begun talks with French technology firm Areva for a possible nuclear power plant development agreement. We already have a relationship with the French firm and are executing orders from them for export markets. Earlier, L&T has signed cooperation agreements with GE Hitachi of the US, Atomstroy Export of Russia, Toshiba Westinghouse of the US and Atomic Energy of Canada.

What is the investment you have made at Hazira in Gujarat?

We have made a big-ticket investment of Rs 5,000 crore in this nuclear shop. Our nuclear shop at Hazira is capable of undertaking all activities related to building an atomic power plant.

How would you benefit if the mode of execution of projects is changed from piece-meals to turn-key?

Well, the nuclear business can be worth Rs 7,000 crore annually if we are allowed to do projects on a turn-key basis. Let me do the whole thing (nuclear plant) and I will deliver it in five years. I strongly lay emphasis on changing the mode of execution of projects from piece-meals to turn-key.

Which are the new technologies that you are keen to invest in?

We will invest heavily in high-technology areas, including defence. L&T has undertaken manufacturing and projects of complex and high technology nature in alignment with what the nation wants. So L&T is basically when people say the builder to the nation. I would say that L&T is just not the builder to the nation but it is aligned to every single technological initiative of the nation. Be it in aerospace industry, in nuclear industry, or now in the defence industry.

How would you sum up L&T?s investment plans in the nuclear sector?

L&T has earmarked Rs 1,200 crore as capital expenditure for this fiscal going up to nearly Rs 2,000 crore in the near future. Investments of Rs 1,500 crore have already been set aside for the nuclear forge shop and Rs 800 crore in offshore installation.