MHI establishing Supercritical Pressure Boiler Manufacturing JV In India with Larsen & Toubro, A major Engineering & Construction Firm

The JV will have its engineering center in New Delhi, India's national capital. The site for the factory will be decided shortly. The new company will handle the full spectrum of activities relating to supercritical pressure boilers, from manufacture and sales to installation and after-sale service. Sales targets are set at USD 435 million after three years and USD 690 million after five years. The JV Company will manufacture under license from MHI for supercritical pressure boiler technology with generating capacities ranging between 500 - 1,000 megawatts (MW).

The JV will be capitalized at Rupees 3 billion (approximately USD 68 million), with MHI owning 49% and L&T 51%. Initially, the JV will start with 50 employees, to be expanded to about 1,250 once production achieves momentum.

L&T, headquartered in Mumbai on India's west coast, is a high technology-driven engineering and construction organization and one of the largest companies in India's private sector. It's diverse offerings scope include execution of turnkey projects and construction contracts in the core and infrastructure sectors, high end fabrication and manufacturing equipments including pressure vessels and columns for chemical plants / refineries and heat recovery steam generators, electrical & electronic products and systems, heavy machinery & industrial products and information technology. The company reported annual revenue of approximately USD 3.2 billion (fiscal year 2006) and has a workforce of about 24,000 employees. L&T plans to enter the large-scale thermal power generation system business in a quest for overall business expansion. MHI signed an agreement with L&T, last October for licensing its supercritical pressure boiler technology.

The establishment of the JV represents a favorable meshing of the aspirations of both MHI and L&T. MHI has been seeking a foothold in power generation operations within India's rapidly growing market while L&T has been looking for a partner possessing advanced technologies.

India's economy expanded at an average 6% per year during the 1990s. From 2005, the growth has accelerated to 9%, and going forward the country aims for 10%. Along with economic development, India's electricity supply/demand gap has become increasingly serious. To cope with the energy supply issue, India plans to boost power supply capacity by 140,000 MW over the next 10 years by setting up large-scale coal-fired power plants. In tandem with this move, a number of supercritical pressure coal-fired power generation plants are planned.

Supercritical pressure coal-fired power generation uses higher steam temperatures and pressures than sub-critical pressure power generation, and is more fuel-efficient and environment friendly. By reducing coal consumption relative to power output, carbon dioxide (CO2) emissions can be reduced roughly by 2.5%. However, supercritical type generation requires more sophisticated technology in equipment design to withstand the high temperature and pressure levels, and machining of high-strength component materials is a complex task. MHI has vast experience with these systems, having already delivered approximately 70 units in Japan and abroad. Supercritical pressure power plants are engineered to operate at steam pressures above the critical point of water: 22.12MPa and 374.15°C (705.5°F/647.3K).