Mumbai: Engineering and construction major Larsen & Toubro will invest Rs2,000 crore ($446 million) to set up a shipyard with capacity to build high-value ships. The company is looking for land in the coastal states of Tamil Nadu, Andhra Pradesh, Maharashtra and Gujarat, its chairman said.
"We are scouting and are looking at four or five locations. We will decide the location by January-end," chairman and managing director A M Naik said. "With increasing trade, there is going to be huge opportunity in shipbuilding. India needs at least two or three large shipyards for its own requirements," Naik added.
L&T already has a shipbuilding facility at Hazira in Gujarat, but it can only handle small vessels, Naik said.
The company has been involved in the construction of several ports and is active in the dredging segment.
The company is weighing various options and may also hive off its shipbuilding unit into a subsidiary or a separate company, Naik said.
Naik said the company had proposed a joint venture with state-owned Hindustan Shipyard Ltd in Visakhapatnam about three years ago. "The proposal has been pending with the ministry of shipping since then. We are still open to the proposal, but we do not know when it will take off," he added.
He, however, said a joint venture with Hindustan Shipyard would not fit into the proposed Rs2,000-crore shipyard as the Visakhapatnam yard has a land measuring only 170 acres.
L&T is also in the process of setting up a joint venture with Mitsubishi Heavy Industries of Japan for the manufacture of super-critical boilers required by mega power projects.
The L&T-Mitsubishi joint venture is expected to start production from 2009 and the company is scouting for a suitable location for the plant in three states, he said.
Naik said the company's revenue was expected to grow 20 per cent in the year to March 2007, while its order backlog of $6.5 billion at the end of September would grow 30-35 per cent over the whole financial year.