L&T eyes $1 bn sales from power play
To invest Rs 900 cr in JVs with Mitsubishi
MUMBAI: Engineering major Larsen & Toubro is targeting annual revenues of $1 billion from its latest diversification into power. Last year, the company signed a joint venture agreement with Japan-based Mitsubishi Heavy Industries for manufacturing supercritical boilers, turbines and generators (BTG) in the country.
Speaking to the media after L&T’s 63rd annual general meeting on Friday, A M Naik, its chairman and managing director, said the company expects the power division to clock $1-billion revenues in the next three years.
He said the company sees a great opportunity in supercritical BTG packages and its power foray would compensate for any downturn due to a slowdown in the global economy. “The power sector will grow at 75-80% every year till it reaches a implementation rate of 12,000 mw to 15,000 mw a year,” Naik said.
Supercritical pressure coal-fired power generation uses steam temperatures and pressures higher than subcritical pressure power generation, and is more fuel-efficient and environment-friendly. By reducing coal consumption relative to power output, carbon dioxide (CO2) emissions can be reduced by about 2.5%.
An analyst with a leading domestic brokerage said all ultra mega power projects are based on supercritical technology and so, the demand for specialised BTG package would be tremendous.
“There are currently no local manufacturers in the country for supercritical technology. Also, there is increasing opposition from the government to sourcing equipment from China,” the analyst said. So such a foray will provide L&T access to a huge untapped market.
Y M Deosthalee, chief financial officer, L&T, said that over the next three years, the company would be investing close to Rs 900 crore in joint ventures with Mitsubishi. It is building two plants for manufacturing supercritical technology-based boilers and turbines & generators at Hazira. The plants are expected to be operational by 2010. The company recently acquired 400 acre in Hazira for the facilities.
L&T is upbeat on its entry into the railway projects business too. “We intend to become a turnkey solution provider for the railway sector. We are targeting revenues of Rs 2,000 crore in two years,” said Naik.
It’s also banking heavily on international operations to increase its revenue base, especially from the Middle East. “We are aiming at getting 25% of our revenues from Gulf countries by next year. A major portion of our capex will be invested in the Middle East,” he said.
For this year, L&T has planned a capex of Rs 2,000 crore and an equal amount for the next year. Its order book stands at Rs 58,000 crore and is expected to touch Rs 70,000 crore by the end of this fiscal. The company proposes to issue 1:1 bonus shares and a higher total dividend of Rs 17 per equity share on a face value of Rs 2 per share for this year.
To invest Rs 900 cr in JVs with Mitsubishi
MUMBAI: Engineering major Larsen & Toubro is targeting annual revenues of $1 billion from its latest diversification into power. Last year, the company signed a joint venture agreement with Japan-based Mitsubishi Heavy Industries for manufacturing supercritical boilers, turbines and generators (BTG) in the country.
Speaking to the media after L&T’s 63rd annual general meeting on Friday, A M Naik, its chairman and managing director, said the company expects the power division to clock $1-billion revenues in the next three years.
He said the company sees a great opportunity in supercritical BTG packages and its power foray would compensate for any downturn due to a slowdown in the global economy. “The power sector will grow at 75-80% every year till it reaches a implementation rate of 12,000 mw to 15,000 mw a year,” Naik said.
Supercritical pressure coal-fired power generation uses steam temperatures and pressures higher than subcritical pressure power generation, and is more fuel-efficient and environment-friendly. By reducing coal consumption relative to power output, carbon dioxide (CO2) emissions can be reduced by about 2.5%.
An analyst with a leading domestic brokerage said all ultra mega power projects are based on supercritical technology and so, the demand for specialised BTG package would be tremendous.
“There are currently no local manufacturers in the country for supercritical technology. Also, there is increasing opposition from the government to sourcing equipment from China,” the analyst said. So such a foray will provide L&T access to a huge untapped market.
Y M Deosthalee, chief financial officer, L&T, said that over the next three years, the company would be investing close to Rs 900 crore in joint ventures with Mitsubishi. It is building two plants for manufacturing supercritical technology-based boilers and turbines & generators at Hazira. The plants are expected to be operational by 2010. The company recently acquired 400 acre in Hazira for the facilities.
L&T is upbeat on its entry into the railway projects business too. “We intend to become a turnkey solution provider for the railway sector. We are targeting revenues of Rs 2,000 crore in two years,” said Naik.
It’s also banking heavily on international operations to increase its revenue base, especially from the Middle East. “We are aiming at getting 25% of our revenues from Gulf countries by next year. A major portion of our capex will be invested in the Middle East,” he said.
For this year, L&T has planned a capex of Rs 2,000 crore and an equal amount for the next year. Its order book stands at Rs 58,000 crore and is expected to touch Rs 70,000 crore by the end of this fiscal. The company proposes to issue 1:1 bonus shares and a higher total dividend of Rs 17 per equity share on a face value of Rs 2 per share for this year.