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L&T ramps up capacity to cater to E&P sector

Larsen & Toubro is ramping up its production capacities and technologies to meet the growing demand for valves, reports Suprotip Ghosh.

business Updated: Apr 14, 2007 03:14 IST

Larsen & Toubro, the $ 4 billion engineering major, is ramping up its production capacities and technologies to meet the growing demand for valves for the national gas grid and the oil and gas exploration & production (E&P) industry in India.

“The national gas grid and E&P companies would be the source of our revenue in the valves business,” SS Chandilya, chief executive, AUDCO India (AIL) told Hindustan Times. AIL is a 50:50 joint venture between L&T and Flowserve corporation of the US. It has 22 per cent of market share in the Indian valves market.

The production line would include valves and caps for deep-sea exploration and production. Currently, Reliance Petroleum and ONGC are among the major investors in the E&P business in India.

The Union government has embarked on a plan to put in place a national gas grid at an overall investment of Rs 53,000 crore, to be jointly laid by Reliance and the state-owned GAIL.

AUDCO, on Friday inaugurated a valve manufacturing facility at Coimbatore. The facility, set up at an initial investment of Rs 35 crore, would be ramped up by investment of another 60 crore in the coming two to three years.

The company has put up a new facility in the same location to manufacture switchgear systems for the power sector. The facility, also worth 35 crore, would cater to the domestic and international markets, said a company release.

Valves made at the Audco facility would be marketed by Flowserve in the US and other developed markets. The manufacturing centre would enable the joint venture to bring down costs by 15 per cent, said Chandilya.

The Audco facility would employ 250 people in the initial stages. The Coimbatore facility would be the fourth facility for AIL. The total output from the four locations will be of Rs 1000 crore, according to company officials.

The Coimbatore valve manufacturing facility has set a target of Rs 300 crore by the year 2010, according to RN Mukhija, director, L&T.

The switchgear facility, which would lead L&T's foray into the medium and high tension switchgear business is set to eventually export 40 per cent of its capacity for exports, said Mukhija.

The company expects Rs 4500 crore revenues from the electrical and electronics business by the year 2010, Mukhija told reporters.

(Reporter is in Coimbatore at the invitation of L&T)

First Published: Apr 14, 2007 03:10 IST