The government is stepping up efforts to create nuclear heavy forging capacities in India and has finalised a plan to recapitalise a six-year-old joint venture between engineering major Larsen and Toubro (L&T) and state-owned Nuclear Power Corporation of India Limited (NPCIL).
Top sources told HT that the government will shortly move a proposal for Cabinet approval to convert Rs 500 crore of debt of the joint venture — L&T Special Steels and Special Forgings (LTSSHF) — into equity to aid the company.
L&T and NPCIL had formed the Rs 1,725-crore joint venture in 2009 for specialised steel and forging products. While NPCIL holds 26% in the JV, L&T holds the remaining stake.
Sources told HT that the move recapitalise and bring out a financial package for the joint venture is part of Prime Minister Narendra Modi’s push for manufacturing through the signature Make in India initiative, particularly in the areas of defence and nuclear energy.
L&T declined to comment on the story, while NPCIL did not respond to HT’s emailed queries.
Sources said Modi is keen that India create its own indigenous heavy forging manufacturing capacities to reduce dependence on overseas vendors.
“It is important for us to develop indigenous manufacturing capacities of forgings to bridge the gap in domestic capabilities and produce equipment for nuclear, thermal power and hydrocarbon plants,” a source said.
At present, China (China First Heavy Industries, China Erzhong, SEC), France (Le Creusot), Russia (OMZ Izhora) and Japan (Japan Steel Works) produce ultra-heavy forgings and special steels.
The NPCIL and L&T joint venture was formed primarily to make special steels and ultra-heavy forgings, but delays in policies for nuclear power projects had forced the company to revise its business plans.
While new capacities are being planned in the UK (Sheffield Forgemasters) and also in India through Bharat Heavy Electricals and Bharat Forge Ltd, the tsunami and earthquake in Japan had triggered a backlash against nuclear reactors.
The joint venture was set up to supply finished forgings for nuclear reactors, pressurisers and steam generators, in addition to heavy forgings for critical equipment in the hydrocarbon sector, as well as for thermal power plants.
NPCIL is currently operating 21 nuclear power reactors with an installed capacity of 5,780 megawatt (MW.)