The Hindu Business Line : L&T launches switchboard, valve facilities in Coimbatore

NEW UNITS: Mr Lewis M. Kling (centre), President and CEO of Flowserve Corporation, and Mr K.V. Rangaswami, President - Operations, and Member of the Board of Larsen & Toubro, at the newly inaugurated Audco India Ltd's valve facility in Coimbatore on Thursday. - K. Ananthan

Coimbatore April 12 The commissioning of the switchboard facility of engineering conglomerate Larsen & Toubro Ltd (L&T) and the valve facility of L&T's associate company Audco India Ltd (AIL) at Malumichampatti near Coimbatore today is the first step in the development of the Coimbatore centre as the biggest growth centre of the company, according to a senior executive of the engineering giant.

The entry of L&T into Coimbatore is also expected to give a major fillip to the small industries in the region, particularly the foundries, as the company which has been procuring components worth about Rs 250 crore annually from the region expects the procurement to grow by 20 per cent a year from this belt.

Speaking to newspersons at the factory site today, Mr K.V. Rangaswami, President-Operations and Member of the Board, L&T, said the Audco India, in which both L&T and Flowserve Corporation, US have equal equity stake, had established itself as a global leader in the manufacture of valves and AIL exported almost 60 per cent of its production.

With growing demand for oil and gas and the huge investments planned mainly in the Gulf region, he said AIL was poised for rapid growth.

Asked about the investment that has been made in the project and the planned investment in the future, he said so far Rs 35 crore has been invested in the Coimbatore valve unit and over the coming few years another Rs 60 crore investment would be made.

On the beneficial impact of the entry of L&T into Coimbatore that is known for its strong engineering base, he said L&T was already procuring components worth about Rs 250 crore, mainly castings, from the region annually and every year there would be a 20 per cent increase in the purchase.

Eyes Rs 80-cr operation

In the first year of operation, the newly commissioned plant was expected to achieve production worth Rs 80 crore that would grow by 30 per cent annually. Coimbatore was chosen for locating the new facility because of the availability of good castings manufacturers and its proximity to Kochi and Tuticorin ports since nearly 60 per cent of AIL's products were exported.

The company expected a 15 per cent savings in castings cost because of the proximity to foundries and the high productivity ratio.

Mr Lewis M. Kling, President and CEO, Flowserve Corporation, said his company was investing in the Indian joint venture not because of the price competitiveness alone. India has tremendous engineering manpower and his company has engineering design centre in Chennai and an engineering centre for pumps and valves in Bangalore. It was because of the engineering skill and workethic that the company was focussing on India and he said it was the people that counted.

Mr R.N. Mukhija, President-Operations and Member of the Board of L&T, said for every one person employed directly by L&T in its facilities, three to four additional jobs were created in vendors' units. The electrical sector accounted for about 11 per cent of L&T total business and it was witnessing a 30 per cent CAGR. He expected the Coimbatore unit to generate business worth Rs 60 crore to Rs 70 crore in electrical systems and products, of which about 30 per cent to 40 per cent would be exported.

He said the company had invested about Rs 35 crore in the switchgear facility at Coimbatore and in the next two years, he expected an additional Rs 60 crore to be invested to ramp up production. He said the Coimbatore facility, spread over an area of 300 acres, would be used for enhancing production capacity rather for any major relocation of L&T's production facilities from elsewhere.

Mr Mukhija said in the next few months, petrol pump facility and precision manufacturing and machining units also would be established at Coimbatore. He expected the total investment on all these projects to be about Rs 500 crore in the next 3 years or so.

Mr S.C. Bhargava, Executive Vice-President, Electrical Sector, L&T, said each of the four divisions coming up in Coimbatore would be looking at an annual turnover of Rs 200 crore to Rs 250 crore in the next three years and L&T was looking at a turnover of Rs 1,000 crore at least from Coimbatore in the next few years.

He said the size of the Coimbatore growth centre was almost three times the size of L&T's facility at Powai in Mumbai and in terms of size, variety, etc Coimbatore would be the biggest centre. It was a conscious decision to come to Coimbatore that edged out nearly 10 other contenders because of its advantages of engineering support, skill and manpower.

AIL's valve facility was jointly inaugurated by Mr Rangaswami and Mr Kling and the switchboards facility was inaugurated by Mr Mukhija

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