The Hindu Business Line : L&T plans manufacturing units in China

Mumbai April 18 Construction and engineering major Larsen & Toubro Ltd (L&T) is planning to set up facilities for manufacturing machines for switchgear, valves, tyre-curing and pressing and coal gasification in China.

It will also source raw materials required for forgings and castings for its manufacturing bases in India. Mr R.N. Mukhija, President-Operations, L&T told Business Line, "We are planning an initial investment of $11 million to introduce new products in the Chinese markets. We will be setting up production facilities for valves in East China's Wuxi New District (a high-tech industrial park in Jiangsu province) and rubber machinery (for tyre-curing) in Qingdao in East China's Shandong province."

Switchgear Facility

The units will invite local equity participation for the projects in China, while holding majority stakes, he said without divulging details. L&T (Wuxi) Electric Company Ltd, a wholly owned subsidiary, has been manufacturing high-end air circuit breakers (ACB) in Wuxi for which China is the world's largest market.

The unit was set up with a $5-million investment. The proposed valve-manufacturing unit will come up near the switchgear facility. The company's sales from international business were up 20 per cent in 2006-07. The targeted growth is over 25 per cent in the next two-three years, said Mr Mukhija. On sourcing, he said: "We are picking up some of the low-end products from the Chinese market and packaging them with our own high-end products to broaden our offerings in overseas markets." The company has managed to save about Rs 30 crore by sourcing raw materials from China in fiscal 2006-07.

Listing Subsidiary

The company will enter the coal gasifying business from China. "It has already bagged orders worth $300 million for the coal gasification equipment that will be using Shell's technology, which has been proven most successful," said Mr Mukhija. The company plans to list its subsidiary L&T Infotech on the stock exchanges.

Last fiscal, L&T Infotech revenues touched Rs 800 crore and a two-year projection is pegged at Rs 1,500 crore.

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