L&T plans major foray into China

Larsen & Toubro Limited, India's largest engineering and construction conglomerate, which has already won several contracts in China, is planning to make a major foray to tap the booming market of the communist giant, company sources said on Wednesday.

"L&T has ambitious plans in China," a company official said, adding that L&T chairman and managing director A M Naik would be visiting China for the first time next week to understand the market and meet industry leaders.

During Naik's visit, the L&T representative office in Shanghai would be formally opened in Shanghai, China's commercial hub.

Naik is scheduled to have meetings with the top Chinese government officials in the ministry of commerce as well as major Chinese conglomerates in the power, petroleum, infotech and manufacturing industries, official sources said.

L&T's heavy engineering division has already secured projects worth some $130 million recently in China, the sources said.

Other divisions of the company are also seriously looking at local partners to boost their presence in China, the sources said.

L&T's heavy engineering division has just won its third successive contract worth Rs 187 crore (Rs 1.87 billion) from China for the supply of critical coal gasification equipment.

This order from the Shenhua Group is for the world's first coal liquefaction plant built on a commercial scale, company sources said.

As part of the new contract, L&T will design and build two sets of coal gasifiers, conforming to ShellCoal gasification process technology, for the plant in Mongolia in northern China.

The Shenhua Group, one of the largest Chinese energy giants, has 6000 MW power generation capacity and is also the largest coal producer in the country.

The new order follows earlier contracts valued at Rs 200 crore (Rs 2 billion) for similar systems for fertiliser and methanol projects in central China's Henan province.

The company had earlier bagged another contract from China worth Rs 105 crore for a similar system being executed for Yuntianhua Group for its 500,000 TPA ammonia plant in Yunnan province in south-west China.

The total value of the projects undertaken by L&T in China has thus reached Rs 452 crore (Rs 4.52 billion), sources said.

L&T's heavy engineering division has supplied critical reactors worth Rs 65 crore (Rs 650 million) for downstream petrochemical projects in China, promoted by multinationals like BASF, BP and Shell.