Engineering major L&T and its green hydrogen joint venture partners– Indian Oil Corporation and ReNew–will invest upto USD 4 billion (INR 32,000 crore) in their green hydrogen businesses over three-five years, CEO & Managing Director, S N Subrahmanyan said Wednesday.
L&T has a joint venture with state-run Indian Oil Corporation and renewable power company ReNew for its green hydrogen ventures.
“We will invest around INR 500 crore in making electrolysers. Also, we have a JV with IOCL and Renew to put up green hydrogen plants. Now that JV can also put up green hydrogen plants beyond IOCL for others, said Subrahmanyan, adding that the investment would be around USD 4 billion.
“Between the three companies there will be sufficient cash available. L&T will fund this through internal accruals. We may need additional land around the port to transport green hydrogen and ammonia for which we are in talks with state governments,” added Subrahmanyan.
This January, L&T signed an agreement with the Norway-based H2Carrier to develop floating green ammonia projects for industrial-scale applications. In March the company entered into an electrolyser manufacturing binding agreement with McPhy Energy, a France-based leading electrolyser technology and manufacturing company.
Under this partnership, McPhy will grant an exclusive license of its pressurised alkaline electrolyser technology to L&T for manufacturing of electrolysers, including future product upgrades.
L&T is setting up one Gigawatt-scale manufacturing facility for electrolysers based on McPhy technology in India to serve the domestic requirements as well as cater to the other selected geographies.
The company has also set up a four-member think-tank– L&T Green Energy Council– comprising global leaders to bolster its commitment to carbon neutrality by 2040 and will be responsible for identifying technology trends in green energy among others.
To buy NPCIL‘s 26% stake in joint venture
Subrahmanyan added that L&T has proposed to buy a 26% stake held by its joint venture partner Nuclear Power Corporation of India (NPCIL) in L&T Special Steels and Heavy Forgings, a joint venture between L&T and NPCIL.
The JV was commissioned in 2012 with the aim to secure supply chain of critical forgings for India Nuclear programme along with undertaking development work for the new generation reactors in the Nuclear as well as the hydrocarbon sector.
“We have a forge shop which is meant for making heavy forgings for nuclear and defence services. We have a 26% stake in the joint venture. That plant is running at an accumulated loss of INR 3000 crore,” said Subrahmanyan, adding that with NPCIL only interested in forging their own plants, L&T was not able to diversify and do anything else.
“So we have made a request to them to sell their shareholding. Some negotiations have taken place and we have agreed. Now the NPCIL board has to agree and finally the government has to agree. If they agree to it we will buy out their stake for INR 150-odd crore, make it L&T 100% owned and merge it with our company and see what else to do with it.”
Company upheld its mantra: AM Naik
L&T’s outgoing Chairman AM Naik (81) addressed his 25th and last Annual General Meeting on Wednesday ahead of his retirement on September 30.
In his final address to the company’s shareholders, Naik said in the last 25 years, L&T has been able to live up to its mantra of “constantly adding value in everything we do.”
“Between 1999 and 2023, group revenues grew from INR 5,000 crore to nearly INR 1,83,000 crore on a like-to-like basis. This surge, achieved largely through organic growth, has few parallels in corporate India. In the same period, market cap climbed from around INR 4,000 crore to around INR 3,74,000 crore at a CAGR of nearly 20%,” Naik said.
He added that L&T’s growth in the last 25 years has enabled the company to create value for its shareholders.
“In addition to the handsome dividends which they receive every year. So, one share 20 years ago is equivalent to 9 shares as of today,” Naik said.
Naik added that L&T has been following the ‘Make in India’ policy for decades before the current government popularised the mantra.
“Looking back, I now realise that we were making L&T future-ready. We had put ‘Make in India’ into practice decades before it became so widely known,” Naik said.
He also said that L&T has been a part of all iconic projects in India including the Statue of Unity to Chandrayaan, the world’s largest cricket stadium to the Bullet Train, from Mumbai’s coastal road project to the trans-harbour project connecting Mumbai and Navi Mumbai.
Naik added that he was confident of L&T’s new Chief Executive Officer S N Subrahmanyan carrying his legacy forward and keeping the L&T flag flying high.
SN Subrahmanyan, will take over as the Chairman and Managing Director of the company with effect from October 1, 2023.
