L&T said it has successfully commissioned a 384 megawatts unit of GMR's gas based power plant at Vemagiri, near Rajahmundry in Andhra Pradesh.
L&T said that with the commissioning of the power generation unit in record time of 24 months, the company has demonstrated its integrated execution capabilities. L&T said that, in September 2006, the company had successfully commissioned the first unit of a similar capacity at the same location. Work is also in its advanced stage for the third unit of similar capacity in which a gas turbine is expected to be synchronized soon. The complete unit is scheduled to be commissioned in the next few months. On completion of all three units, the national grid will benefit from a total capacity of 1,200 megawatts (MW) gas based power plant at a single location, L&T said in a statement. L&T said, this project has been executed by the Gas Based Power Projects -- Strategic Business Unit of L&T Power, based in Baroda. L&T's scope included design, detailed engineering, supply, installation and commissioning of the complete power plant on a turnkey basis. The plant incorporates state-of-art advance class gas turbines from General Electric and high efficiency steam turbines from Alstom, L&T said in a statement. On Tue, Dec 13, 2011 at 3:54 PM, RAJESH DESAI <[email protected]> wrote: > Biz confidence hurt, facing risk of sluggish order: L&T > > It has been long since Indian companies had hit the alarm button of a > growth slowdown and now here it is. It is official that Indian economy is > not growing but infact has contracted to a 28-month low of negative 5.1% in > October. Criticising government’s inability to bring any policy action, AM > Naik, CMD, L&T feels that policy measures could have boosted growth > significantly. > > In an interview to CNBC-TV18, Naik stressed that India must get the house > in order and stop worrying about global cues. He is worried that GDP > growth of more than 7% is unlikely. > > Expressing concerns about the slowdown, he added that business confidence > is significantly hurt while the power division has been worst hit. Unhappy > with government’s inaction, Naik emphasized that coal block issues could > have been resolved in weeks. > > The impending risk of sluggish orderflow is looming large as growth will > be hurt if global orders don’t pick up. The overhang will be felt in FY13 > -14 revenues, he pointed out. “FY13 will be very challenging focussing on > export markets. Orderflow growth will be at best 0-5% in FY12,” Naik added. > > *Below is an edited transcript of his interview with Udayan Mukherjee. > Also watch the accompanying video.* > > *Q: We have seen some very bad IIP numbers, but how bad is the situation > on the ground?* > > A: It has been bad. I have been expecting this for more than a year > because the capital goods spending or project spending is the first > indicator of how the economy is going to behave in future. So I have been > always saying that I don’t think the growth will be more than 7%. > > The worst can come next year because I don’t see too many things in the > pipeline; there are many policy decisions still not being taken. I have > been talking about liberalization of defence which can create hundreds of > thousands of jobs, but it is still being imported. For that matter, it is > given away to very non-performing public sectors, and the offset has been > diluted. Even power equipments are being imported due to which the industry > itself is in disarray. > > So there are many things for which we are not dependent on global economy > or what is happening in Europe. But we have to put our own house in order > first and it should be immediately tackled so that we can see some recovery > during the second half of next year, at least in capital goods. And if the > capital goods doesn’t grow two years down the road, it is going to have an > effect on auto, consumer goods and so on and so forth. > > *Q: GDP growth aside, why has the investment cycle stalled so badly over > the last few quarters? What would you say is the real problem for such a > weak investment cycle which is weakening with every passing month too?* > > A: The Reserve Bank of India has increased interest rates 13 times and > banks have passed it forward, which makes projects expensive. Many of them > are not viable at these interest rates. > > If you see the western world, they have brought down interest rates to > spur the economy to 1-2% maximum. How can you have a growth if you have > more than 11-12% of the interest? In an already high cost situation, this > only adds fuel to fire. The inflation is already high, so there is hardly > any positive that one can see for investing at this point in time. > > *Q: When you speak about policy inaction, and that also being a big part > of the problem, what kind of policy are you alluding from the government > which has led to some kind of freezing up of the investment cycle?* > > A: What I have been saying is on the defence. For example, instead of > depending on the private sector for investment and acquisition of defence > equipments, more than 80-90% is being imported. Whatever is being made here > is done by the public sector, which doesn’t perform. Deliveries extend by > more than four-five years and cost overruns are huge, but still the private > sector won’t be allowed. > > This is something which is in the government’s hand; it has been sitting > there for last six years. Defence Ratna and so on could be implemented to > make sure that future defence equipments are made in country with minimum > knowhow that is required for abroad and the industry will rise to the > occasion. This has no concern with the investment from private sector; it’s > a policy decision which is pending for five-six years. > > When it comes to other industries like steel, cement and commodities, they > are all capital intensive and if they don’t see economic growth coming, > obviously they are going to slowdown their own investment. That’s what has > happened, whether it is steel or aluminium or anyone else. The other thing > is auto; if you don’t have the purchasing power improvement in larger > section of the society, obviously it will affect the consumer durables, the > autos and the other consumer products. > > *Q: Which of the businesses or verticals that you work in L&T seem the > worst affected between power, hydrocarbons, metals etc. Where are you > seeing the greatest amount of sluggishness and delay in execution or > decision-making?* > > A: One is power sector, because the industry itself is facing problems on > coal linkages. The recent hope in farmers is that they will get 5-6 times > more for the land, due to which land acquisition has become very difficult. > There are also problems with water connection. Proper power purchase > agreements are not signed, and those which are signed are not paid by the > electricity board because they are giving away power to most of the > sections of the people for almost free. So all of this needs to be > corrected if you want investment, because the demand is there. With 1.2 > billion people, there is demand for almost anything. > > Many of the coal blocks are not allotted for two years; we hear it will be > done next month, but it gets delayed again. These are things which can be > set within a matter of weeks, but has been pending for years. When you look > at for what trickles in for the power industry, most of it gets imported > from China because of that 30% indirect subsidy on account of managed > currency. There also is the indirect subsidy of 10-12% and on top of that > we have Indian taxes of 11-12%. So now you have a gap of 54-55%, due to > which Indian power equipment manufacturers do not have work. I think these > are the serious problems in power industry. > > Cement has slowed down, but I won’t say as much as power. Steel also has > slowed down, but those who have committed to the funding are still going > on. It is the new funding, the new projects I don’t see. Nobody has stopped > the work which is going on at this stage, but the question is if there new > projects in pipeline. With the current political environment and the kind > of situation you see everyday, very few people will think about going ahead > and making a big investment till they see political stability. So political > stability plays a big role and currently that is not there. > > *Q: You had earlier cut down your order inflow guidance to 5% in FY12. > With the way things are going, do you think you can get any growth in FY13 > on order inflow?* > > A: Next year it is going to be very challenging, but we are doing our > level best to see what we can do outside India We are putting all our > efforts in that direction, and should that materialise and mature which > normally takes a long time, I think we will have second half where we will > begin to make up from outside India rather than from within India.the > Indian prospects are not going to be that good and > > I hope we succeed in what we are trying to do outside, we did about 1.5 > billion this year from outside India and I think we want to take it to 2.5 > billion next year and if that happens we will have just about that 5% > growth otherwise it will be zero growth or negative but we are hoping that > we will make some success outside India. > > *Q: You did concede that it takes a lot of time and effort to convert > those global orders; do you think there is 50% chance that you are staring > at flat to negative order inflow growth in FY13?* > > A: I would say its not 50%, but 25-30% that growth could be flat and > hardly 5-10% chance that it could be negative. 50-60% chances are that we > will recover from outside India because of the amount of investment we have > made for the last one year. We have been opening up new offices for > hydrocarbons, and almost all companies qualify L&T up to USD 1 billion > projects. We have also opened up many gates for building infrastructure > outside India and Gulf, and I only hope that we will bring about some > relief. > > About two-three years ago, people used to say that one L&T is not enough > in India and you need four- ten. Today, the same L&T don’t have enough > work, so what must be the condition of others. The sales are not going to > be impacted because of the backlog, but that will have tailing effect on > FY13-14. > > *Q: Do you think the competitive intensity, especially in a difficult > time, will reach such proportions that even margins will be under pressure > in FY13 in a difficult order inflow environment?* > > A: The point is it’s a normal situation where if there are not enough > orders and if many companies are chasing the same orders, obviously the > pressure on margin comes. We are now putting all our efforts to do cost > cutting to a point where the impact will be minimal, but its only natural > that the pressure will come on margin. But that is making all of us believe > that we will have to make good by drastic cost reduction. So lots of > economic measures in L&T are currently on the way to make sure that the > impact is minimal. > > *Q: You would be aware that the government has circulated the draft note > for the duty of imports on power equipment and what is being proposed is > 14% but 5% import duty, 5% special additional duty and 4% countervailing. > This is at a slight departure to what the Maira Committee had recommended. > Are you okay with this format or this formula?* > > A: Not really because it doesn’t help indigenous power producers because > the countervailing duty does not have any moderating opportunity, so it’s > an extra cost. Also, it does not offset our taxes which were considered to > be 11%. So 10+4 is what was recommended and that is how it should be done. > > *Q: So 5+5+4 does not make you competitive?* > > A: It’s not a question of competitive; it’s a question of whether it > offsets the tax burden and the answer to that is no. 5+4 is 9 and what we > need is 14. The CVD and excise is anyway additional burden on the producer > and we as well will pass on to them. So that 5% CVD and excise duty should > have really been 10% on import duty. I don’t know what they get out of > changing this. We have been resisting this as well as the power producers > have been resisting it. > > *Q: In the next three quarters, do you expect minimal order inflow and > are you confident of even reaching the 5% order inflow guidance if the Q4 > is very tough this year?* > > A: We have quite a few projects from infrastructure right now in pipeline, > both within India and elsewhere and we are working hard to make sure that > happens and if that did then we should be at least not negative. We will be > somewhere between same or 5%. > > *Q: Zero to 5%?* > > A: Yes. > > > > > > -- > CA. Rajesh Desai > > -- CA. Rajesh Desai -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
