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L&T draws up 10-year plan for Coimbatore

Special Correspondent

L&T Demag Plastics expands capacity; company bets on exports of machinery

— Photo: Bijoy Ghosh

SOUTHERN EXPANSION: The Chairman and Managing Director of Larsen and Toubro, A. M. Naik (left), with the Chief Executive Officer, Mannesmann Plastics Machinery, P. R. Dinandt, addressing a press conference in Chennai on Saturday.

CHENNAI: Engineering and construction giant Larsen and Toubro (L&T) has drawn up a ten-year plan to develop the textile city of Coimbatore as its second growth hub for manufacturing after Chennai in Tamil Nadu.

Addressing a press conference here on Saturday, A. M. Naik, Chairman and Managing Director, said the group had already set up a switchgear unit in Coimbatore. He indicated that a valve unit could come up there soon. Going forward, L&T could make precision tools, dies and the like in Coimbatore. The CMD said the company would take a call on products and investments to be made in that city as the situation evolved. "We have a great presence in the South and Chennai is our second largest base,'' he said. In Chennai alone, L&T had close to half-a-dozen factories, he said.

Mr. Naik also said L&T was looking for a location to set up a production base to make marine structures like oil rigs, oil platforms and floating production systems. The company was looking at sites in Andhra Pradesh, Gujarat and Tamil Nadu, he added. The company was still in the process of firming up its business plans in this regard. ``We have not yet even come to the blueprint stage,'' he said.

The CMD said L&T "is becoming an Indian multi-national company.'' The work on this mission had begun already. Asked if L&T would go in for a multiple listing in view its ambition to become an Indian MNC, he said, "I can't rule this out.'' On the Damra port project, jointly developed with the Tatas, he said, "it is moving ahead. The financial closure is likely to happen in three months.'' January 14, 2006 had been set as the target date for commencing construction on the project, he added.

L&T had been growing at 25-30 per cent (even after selling cement and tractor units). "This trend will continue,'' he added. Mr. Naik based his bet on the robust growth of the economy, which was growing at seven-eight per cent. L&T benchmarked itself against the best in the world. As a consequence, the priority was for exports, he said. Be it rubber machinery or heavy engineering, L&T laid much store by exports, he said quoting numbers.

Mr. Naik was worried about the attrition rate in the engineering industry, which now stood at 15 per cent. The growth in the IT industry had seen many good quality engineers migrate to the service sector. "We have to give them virtual global opportunity. Then they won't leave,'' he said. With the new Rs. 25-crore manufacturing facility in Chennai of L&T Demag Plastics Machinery Ltd., a 50:50 joint venture with Demag Ergotech GmbH, going on stream from Sunday, the company had set a sales target of Rs. 125 crore this year. Though the company was growing at 25-30 per cent, capacity had been a constraint for it. The new facility would see capacity go up from 350 machines a year to 600 machines, Mr. Naik said. This would drive the growth by another 5-7 per cent, he added. L&T Demag makes plastics injection moulding machines. Indications are that the capacity will be expanded to 1,000 machines soon.

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