L&T is all set to sign Toshiba JV deal

It is likely to be sealed by the end of this month

Engineering major Larsen & Toubro (L&T) is close to signing a joint venture agreement with Japanese turbine manufacturer Toshiba.

Though company officials did not disclose the details, it is learnt that a deal may happen this month.

“We are at a pretty advanced stage of talks with the Japanese company and may ink a joint venture agreement shortly,” a senior L&T officer said.

The venture will manufacture and sell turbines for super-critical power projects, especially the ultra mega power projects (UMPPs).

The company had signed a similar agreement with another Japanese company Mitsubishi Heavy Industries (MHI) in April for manufacturing and selling boilers for power plants using super critical technology.

Under the agreement, L&T and MHI will jointly set up a manufacturing facility in the country for the boilers with an investment of close to Rs 300 crore.

“The Japanese are very particular about each detail. That is the reason why it is taking time,” the company official said. 

Sources said that the terms and conditions with Toshiba would be very similar to that of Mitsubishi along with the investment planned.

“The joint venture with Toshiba would accompany a technology transfer agreement and licence agreement with an investment outlay of approximately Rs 300 crore,” the company official said.

He said once the agreement is in place, it will take at least two years to commission a manufacturing facility in the country and start production of the turbines.

Till then, the company will source the turbines from Toshiba and will market them here.

“We are currently scouting for land for a possible manufacturing facility and will come up with a decision next month,” he said.

L&T had been looking for land for quite sometime now — with interests in Gujarat and Tamil Nadu.  The company is also very keen on Hazira in Gujarat where it already has ample land along with a jetty for shipping in the boilers and turbines.

Keeping in tune with government’s focus in the power sector, L&T has rolled out a new vertical to concentrate in the power sector and has earmarked Rs 750 crore for investing in the two upcoming manufacturing plants for boilers and turbines.

“L&T plans to build its capability so that it can emerge as a one to one solution provider for power projects and its focus will be mainly on executing larger projects,” the company official said.