L&T Power plans to outsource equipment manufacturing activities at Hazira to meet rising demand for power equipment from power companies

Engineering and construction major Larsen and Toubro’s (L&T) subsidiary L&T Power plans to outsource equipment manufacturing activities at Hazira to meet rising demand for power equipment from power companies. “We plan to increase outsourcing of components and equipment needed for our supercritical steam boiler, turbine -generator facility at Hazira,” said L&T Power managing director and CEO Ravi Uppal.
The exercise will help us to reduce the cost of expanding the facility from estimated `1,500 crore to close to `1,000 crore, he added. The company plans to expand its equipment manufacturing facilities from 4,000 mw to 6,000 mw. The company commissioned the 4,000-mw facility for supercritical (main power equipment or BTG package) equipment manufacturing at Hazira this year with an investment of over `3,600 crore.
With a pick-up in demand for power projects, the company is now considering to advance its expansion to 6,000 mw earlier than the scheduled time of 2012-13. Outsourcing will help it to implement projects faster at much lower investment. The unprecedented demand coming from new power projects has already swelled the order book size of L&T Power to `26,000 crore and it has received firm booking for 6,500-mw of equipment.
“The outsourcing will mainly happen on the boiler side where our Japanese partners are already giving final touches to a massive programme,” said Mr Uppal. He said that first in line for outsourcing may be fabrication items.
L&T Power has two joint ventures with Japanese company — L&T MHI (Mitsubishi Heavy Industries) Boilers and L&T-MHI Turbine Generators — that is implementing the supercritical equipment facility at Hazira. MHI has initiated a comprehensive programme on vendor development by bringing all its suppliers from Japan to set up shop near the existing manufacturing facility. Besides, other investors are also being tapped to invest in supporting L&T’s manufacturing facility.
The government is banking heavily on L&T to come to the rescue of power projects in the country that have faced delays in the past due lower domestic manufacturing ability of equipment in the country. So far only state-owned BHEL has been manufacturing main power equipment for power projects and it has faced problem in sticking to the promised delivery schedule due to heavy bookings. Now BHEL is also expanding its capacity and three to four other consortiums have also expressed desire to invest in supercritical equipment manufacturing in India.