L&T wins Rs977 crore defence ministry order

L&T wins Rs977 crore defence ministry order

Mumbai: India’s largest engineering firm, Larsen and Toubro Ltd (L&T), has won a Rs977 crore order from the defence ministry to design and construct 36 high-speed interceptor boats to be used by the coast guard for patrolling the high seas.

Although small in value, it is a breakthrough naval order for a firm that is betting on defence manufacturing to propel its future growth, according to M.V. Kotwal, board member and senior executive vice-president, heavy engineering, L&T.

The company expects the local and export defence markets to be worth $500 million (Rs2,275 crore) in the next six to eight years, Kotwal said on Monday.

“The government has already said publicly they will allow private companies (in defence manufacturing) and we have made investments according to that," he said. “We are going through a transition of government shifting some orders from public to private companies and we expect orders in artillery, naval ships, submarines, launchers and radars."

L&T will deliver the boats in 18-99 months. They will be built at its shipyard in Hazira, Gujarat, as well as at its new shipyard-cum-port in Kattupalli, Tamil Nadu.

“In Kattupalli, we will build defence equipment, ships and ship repairs in the first phase, for which we are investing Rs1,500-2,000 crore. We expect the first phase to be ready in the second half of next year," Kotwal said.

L&T has been involved in an India-Russian project to build the supersonic cruise missile BrahMos and has also contributed to the construction of a nuclear-powered submarine in association with the Defence Research and Development Organisation.

An analyst said L&T was wellplaced to exploit opportunities in defence but erratic orders made future growth predictions difficult.

“There is huge scope in defence and it is a competition-less market," said Shailesh Kanani, senior equity research analyst at Angel Broking Ltd. “L&T has invested considering the huge potential in the business, but so far there is no separate information on how much the company earns from defence."

L&T dropped 0.22% to end Monday at Rs1,617 a share on the Bombay Stock Exchange, on a day its benchmark Sensex index shed 0.95% to close at 17,410 points.