L&T?s shipyard plans get nod from government

With the Tamil Nadu cabinet clearing the project, Larsen and Toubro Ltd (L&T) will move ahead to set up a Rs3,000 crore new shipyard-cum-port project at Kattupalli in Thiruvallur district of Tamil Nadu in India as a special economic zone (SEZ). The state government?s approval came nearly 16 months after L&T had first submitted a formal proposal to the state in September 2006.

The cabinet clearance will pave the way for L&T to sign a MoU with the state government to set up the project through a joint venture with the state-owned Tamil Nadu Industrial Development Corp. Ltd (Tidco). L&T will hold close to 98% stake in the joint venture. The cabinet approval will also allow L&T to acquire about 1,200 acres of land from Tidco to set up the project. Once the land is in its possession, L&T will submit a proposal to the Union commerce ministry to develop the project as a SEZ that will build commercial ships, naval vessels, offshore oil rigs and other heavy engineering products.

L&T plans to start construction work on the project after the SEZ is notified. The commerce ministry?s decision on the SEZ is expected within two months of L&T submitting the application. L&T is currently negotiating shipbuilding orders worth $1-2 billion with shipowners.

The proposed shipyard at Kattupalli will be capable of building 25 ships a year and repair 50-60 ships annually. When fully operational, the shipyard-cum-port project is likely to employ close to 10,000. L&T plans to begin building ships by end-2009 and deliver the first ship 12-14 months later.