L&T set to build warships

Going after the government???s planned Rs50,000 crore investment in warships, India???s largest engineering and construction firm Larsen & Toubro Ltd (L&T) plans to build defence warships and para-military vessels at its proposed shipyard at Kattupalli, in Tamil Nadu, to cater for the needs of the Indian Navy.

???L&T plans to enter the defence shipbuilding sector even though the proposed shipbuilding facility at Kattupalli will also build general cargo ships and jack-up rigs for the offshore oil industry. L&T is the only entity in the private sector that holds a licence from the government to build warships.

The Garden Reach Shipbuilders & Engineers Ltd, Goa Shipyard Ltd and Mazagon Dock Ltd are all authorized to build warships and all three are state-owned entities controlled by the Union ministry of defence. Cochin Shipyard Ltd, controlled by the Union ministry of shipping, has licence to build air defence ships.

L&T???s defence division already makes ancillary equipment for ships, such as propulsion steering gears and shafts. The dry docks and jetties at the Kattupalli yard, used for building civilian ships, will be utilized for making warships as well. ???But the processes and management will be separate and each business will function as an independent cost and profit centre.

L&T plans to bid for the navy???s submarine building programme, dubbed Project 75 and 76, which involves building 24 submarines with an investment of $14-16 billion. India has already signed a $3.5 billion deal with French-firm DCNS to acquire six Scorpene class submarines out of the total 24 submarines in the navy???s project. The project included a licensed production of submarines in India under a technology transfer agreement, which was awarded to the state-owned Mazagon Dock. L&T had unsuccessfully bid for this project.

L&T plans to participate in the project when the navy invites requests for proposals to build the balance 18 vessels locally. L&T may team up with a domestic state-owned firm or a foreign partner if it wins the tender. L&T plans to begin construction of ships by end-2009, with plans to deliver the first ship by 2010-11.