Mitsubishi Heavy Industries Ltd (MHI) of Japan is in talks with Indian companies for setting up joint ventures for manufacturing power turbines and building ships. Both the power-equipment and shipbuilding industries in the country are poised for rapid growth—the Indian government has embarked on a drive to set up nine large power projects with a capacity of 4,000MW each, and existing shipyards are increasing capacity, and companies such as Larsen & Toubro Ltd are setting up new ones to meet bothdomestic and global demand.
“A lot of Indian companies have approached us for both turbine manufacturing and shipbuilding. The talks are in initial stages and we are taking a look,” said a senior executive at MHI, who did not wish to be identified.
MHI already has a joint venture with Larsen & Toubro to set up a manufacturing facility that will make super-critical boilers at an investment of Rs750 crore; the facility will have a capacity of 3,000MW to 4,000MW per annum.
MHI is one of the world’s largest heavy machinery manufacturers, with consolidated sales of around $25 billion (Rs1.03 trillion).
The power-equipment business in India currently has only one company, public sector firm Bharat Heavy Electricals Ltd (Bhel) and a government body has said that the company was responsible for some of the delays and shortfalls in meeting the country’s power generation target for 2007. The company itself claims that it has enough capacity to meet demand.
“There is definitely a scope for other players to get into the manufacturing of turbines and boilers for power projects,” said R.V. Shahi, India’s former power secretary.
New shipyards have begun to emerge in India and companies from traditional shipbuilding countries such as Norway, Japan and Korea have begun to explore options in the country. “A lot of new yards are coming up in Gujarat, Tamil Nadu, Andhra Pradesh and Orissa and the Indian companies are trying to find overseas partners,” said Arvind Mahajan, executive director at accounting firm KPMG.
India, experts said, could do with some competition in the power equipment manufacturing sector as this will lower costs and help power project developers get better rates from suppliers. This could mean lower tariffs, they added.
Compared to India, which only has Bhel, China has four companies. Analysts say this is one reason why China adds five times the power generation capacity as India annually. Other foreign companies that have evinced interest in setting up power equipment manufacturing facilities in the country include Toshiba Corp., Hitachi, Dosan, LMZ (Russia), Technoprom (Russia) and Dongfang. These companies have been lobbying for scrapping the import duty on asset imports.
At present, India has a power generation capacity of 128,000MW.