India's Larsen & Toubro and Rolls Royce Sign Nuclear Technology Transfer Agreement

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading Indian engineering and construction major Larsen & Toubro Limited (BSE:500510) (L&T) (Mumbai) and power systems leader Rolls Royce Group plc (OTC:RYCEY) (London, England) will work together to develop light water nuclear reactor technology. Light water reactor technology is a popular nuclear reactor technology, which is used in more than 60% of nuclear power plants in the world. The memorandum of understanding is part of the bilateral nuclear cooperation initiative between the U.K. and India. The joint venture will commence fabrication and production shortly and is expected to supply equipment to utility companies such as Electricite de France SA (EPA:EDF) (Paris, France).

As part of the agreement, the L&T-Rolls Royce alliance will design and manufacture state-of-the-art reactor components, waste management techniques, instrumentation and control equipment, system engineering, and products and services for nuclear plants. Sources have said that as the first step of the equipment supply chain, L&T will develop and supply control and instrumentation systems. Rolls Royce is a leading player in industrial power systems and services. The group's engines and allied components are used by leading names in the aerospace, defense and automotive sectors. Rolls Royce also plays an advisory role in recommending nuclear technology and engineering services to nuclear power producers and governments in the U.S. and Europe. Rolls Royce has also provided engineering services and support to France's 58 operating reactors.

Rolls Royce has 54,000 operating gas turbines at 4,000 corporate installations, 160 armed force bases, 600 airline companies and 2,000 marine companies. At the end of 2009, the group, which employs about 38,000 people in 50 countries, recorded revenues of £10.1 billion ($15.3 billion) and an order book value of £58.3 billion ($88.4 billion). Recently, Rolls Royce also announced a joint venture with Hindustan Aeronautics Limited (HAL) (Bangalore, Karnataka) to design and supply shroud rings for the V2500 RB211 and Trent series of engines. About 10% of these engines will be used by India's defense forces. The manufacturing facility, which will be set up with a $4 million investment by each partner, is expected to begin production in 2012. The companies are already partnering in the manufacturing of Adour Mk871 engines, which are used in the Hawk Trainer jets. The Indian Air Force has signed a deal for the supply of 66 jets using this engine.

Earlier, L&T signed nuclear technology agreements with Russia's nuclear regulatory body Rosatom Nuclear Energy State Corporation (Moscow), GE-Hitachi Nuclear Energy Incorporated (Wilmington, North Carolina), a consortium of Westinghouse Electric LLC (Monroeville, Pennsylvania) and Toshiba Corporation (TYO:6502) (Tokyo, Japan), and Atomic Energy of Canada Limited (Mississauga, Ontario). Industry analysts have observed that L&T's extensive experience and nuclear equipment manufacturing expertise has made it a preferred partner for international nuclear firms looking at tapping India's growing atomic energy market. Before signing the deals, representatives from the international firms also inspected L&T's manufacturing facilities at Hazira in Gujarat and Powai in Maharashtra. L&T is also setting up a world-class heavy forging unit at Hazira with a melt shop able to produce ingots of up to 600 tons and a heavy forge shop and press for the production of nuclear and industrial components. The facility will be a 74:26 partnership with the state-owned Nuclear Power Corporation of India Limited (NPCIL) (Mumbai). L&T woll hold the majority stake. The forgings manufactured at this plant will be made from molybdenum and vanadium steel.

In a related development, L&T announced that its combined order book value has reached about $22 billion. L&T was the first Indian private sector company to achieve this feat. L&T is second only to public sector enterprise, Bharat Heavy Electricals Limited (BSE:500113) (BHEL) (New Delhi), which has an order book value of $32.1 billion. L&T's order book value in the current quarter is about $3.4 billion, with the infrastructure division accounting for nearly 41.5% of the orders. For additional information, see April 6, 2010, article - India's Larsen & Toubro Limited's Order Book Value Reaches $22 Billion.

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