L&T to invest $111mn in new shipyard
The co also expects to bid for orders from the Indian Navy, following a decision by Govt to lift restrictions on the pvt sector in defence contracts.india Updated: May 03, 2006 18:41 IST
Larsen & Toubro Ltd, India's largest construction and engineering firm, aims to invest more than $111 million to build a second shipyard and grab a share of the global demand for vessels, a senior official said.
L&T, which won a $129 million contract in April to build a fuel management facility at Kuwait airport, has been looking to expand its operations in the Middle East and to tap new businesses to boost growth.
The second shipyard project is part of this strategy as it sees a growing demand for specialised vessels.
"We are looking at several locations on the east and west coast and investments are not a constraint," MV Kotwal, senior executive vice president of L&T's heavy engineering division, said in an interview on Wednesday.
He did not give a time frame for the project.
L&T said on Tuesday it had won an order worth Rs 4.4 billion ($98 million) to build four semi-submersible container cargo vessels for Zadeko Ship Management CV of the Netherlands.
It was the maiden order for L&T's first shipyard, work for which had started at Hazira in the western state of Gujarat about 18 months ago.
The first vessel would sail out in the first half of 2008, Kotwal said, adding the Hazira shipyard hoped to bag more orders of a similar size in a year's time.
L&T plans to build liquefied natural gas and oil carriers at the second facility, while the Hazira yard would focus on specialised vessels like survey ships, offshore and multi-support vessels.
The company also expects to bid for orders from the Indian Navy, following a decision by the government to lift restrictions on the private sector in defence contracts.
"We hope to participate in a bigger way," Kotwal said, referring to Indian Navy orders.
Shares in L&T, which had jumped 48 per cent since January 1 beating a 30 per cent rise in the benchmark BSE index, were trading 1.1 per cent lower at 2,695 rupees in the afternoon.
L&T, whose heavy engineering and construction division contributes 85 percent of its revenue, had posted a near doubling of profit to Rs 2.59 billion for the fiscal third-quarter ended December 31. Sales grew 14 per cent to Rs 37.8 billion.
Its order book then stood at Rs 162.11 billion, up 80 per cent from a year earlier, and L&T said it expected orders to grow 50 per cent for the full year to March 31. The company is expected to release fourth quarter results later this month.