L&T looks to outsource power equipment manufacture

With orders for boilers and turbines worth over Rs 25,000 crore on hand, L&T-MHI is scouting for opportunities to outsource.

Officials of L&T have been visiting facilities of domestic boiler manufacturing companies to ascertain if some parts of the equipment can be made there.

Last week, they were in Tiruchi, a fabrication hub where a number of BHEL's ancillaries have surplus capacity. Sources told Business Line that L&T's officials visited six units – Cethar Vessels, GB Engineering, Veesons, Jayram Engineering, Athreya and Emperor Engineering.

“Yes, they came to us,” Mr K. Subburaj, Chairman and Managing Director, Cethar Vessels, said on Monday. “We told them that we are in a position to manufacture boilers up to 2,000 MW of capacity a year.”

The Rs 175-crore Veesons has told L&T it would be able to supply pressure parts (headers, coils and piping) up to 200 tonnes a month.

“Larger units such as Cethar, GB and Veesons have surplus capacity that could be used to service customers like L&T,” Mr B. Pattabhiraman, Managing Director, GB Engineering, said. In 2007, Larsen & Toubro Ltd joined hands with Mitsubishi Heavy Industry of Japan to form two joint ventures – one for producing boilers and the other for turbines. The production facilities are coming up at Hazira, Gujarat. It is learnt that the factories will be production-ready in 2011.

L&T-MHI has secured several orders, which, at a conservative estimate, are worth at least Rs 25,000 crore. The latest order L&T bagged is for a 2x660 MW supercritical unit at Rajpura in Punjab. L&T will form a company to put up the project, which will operate as an independent power producer.

While L&T is yet to announce the order public, a senior official of Punjab State Electricity Board confirmed to Business Line that L&T quoted the least – Rs 2.93 a unit – in the tariff-based bidding project. The boiler and turbine-generator will be supplied by L&T-MHI.

With this, L&T has won orders for the supply of eight sets of supercritical boilers and turbines of 660 MW, across three projects (see table). In addition, it has orders for two turbines of 800 MW, which incidentally, was the first order bagged by L&T-MHI.

It is learnt that L&T-MHI is close to securing another order in Uttar Pradesh for two BTG sets of 660 MW.

With all this, L&T-MHI has the most number of orders for supercritical boilers and turbines – all secured in the last three years.

A spokesman of L&T told Business Line that the lack of manufacturing capacity is of no consequence because the equipment “can come from anywhere”, including Japan.