As a manufacturer for the nuclear industry, liability clause is unfair because components are made to NPCIL specifications, says MV Kotwal, President Engineering Head, L&T, in an interaction with Pradeep Pandey.
Talking about heavy engineering segment, what kind of market sentiment are you witnessing?
Last year, demand and order booking was very slow, but it is picking up gradually. In the heavy engineering segment, we have hydrocarbons in which hydrocarbon equipment from petroleum, petrochemicals and fertiliser are included. In the first segment, i.e., hydrocarbons, we export between 55-60 per cent. The second segment includes defence, nuclear and aerospace. To that extent, conditions outside India has impacted the heavy engineering segment in the last three years. However, the need was always there and now that things seems to have improved, we can see that there are some projects coming up, which earlier were deferred. We are witnessing an upswing demand for our equipment mainly from the Middle East countries. Even the US market is opening up because of shale gas. However, European countries has not yet shown visible signs of great improvement because they are still having their problems. In the defence segment, we are very well placed in terms of investments. We have developed our capabilities but substantial growth in volumes has not really occurred. However, the signs are there in the latest procurement procedures that the government is going to give greater role to the entire private sector manufacturing.
In the nuclear segment, we are well placed because of the fact that not only for the domestic programme but also we have invested heavily into our new forging facility at Hazira. This was primarily aimed at two things: one is the high pressure hydro carbon equipment and second is the civil nuclear equipment both for Indian applications and exports. The plant we have put up is absolutely world class and places India on global map, because nobody else can manufacture such forging here in India. So technologically, we are well placed and have made substantial investments.
Do you think that the recent announcement by UK for building a new nuclear plant and revival of joint initiative between India and US pave way for others global players to revive their nuclear plan?
Certainly. There are many countries that actually wonder why Germany decided not to add any new nuclear reactors. This happened because substitute was very expensive to them in terms of power and how to get that power to the grid was going to be the big issue. Apart from that, all other countries are going ahead with their plans, and as I said that the delays were because each country has to address their safety design issues. UK certainly has given some kind of encouragement at this point of time and I believe other countries in Europe will also follow the same. As far as Westinghouse is concerned, they have got a modular design for a reactor, which is quite standardised. In India, probably out of the two American possibilities, they should be the first ones to come because their site has already been identified.
According to reports, the government will probably dilute the nuclear liability act clauses for US companies to put projects on fast track mode. What is your say on this?
This is where I think even media and all the people should really look at meeting our objective. The situation in India is different from any other country when it comes to putting up a nuclear power plant. In the earlier days, when India was denied any kind of involvement in the global scene because of all that situations earlier, we built our capability within the country to design and built reactors and operate them successfully. This has made India to participate in the global arena. Having said that India is in the global scene, Indian policies should match global policies, there is no need to be different.
You had earlier said that Indian suppliers should not come under the Nuclear Liability Clause as they function under close observation of NPCIL. Please elaborate more on this?
What I had said was totally different from what was printed. I had said that as a manufacturer, we make reactors or reactor equipment based on the designs provided by NPCIL. So we are not designers of nuclear reactors, we make what is called built print (design provided by NPCIL), and design in a particular way and specify the conditions we manufacture under those conditions and satisfy those requirements. The fact that we satisfy the requirement is ascertained by NPCIL, so reactors are not made under the supervision of NPCIL but they are subject to all the requirements of NPCIL and they certify with all their quality surveillance. So that is the kind of limited role we play as suppliers.
So you think Indian companies should be kept out of liability issue?
Not just Indian companies, any company or supplier worldwide should follow the global norms. It should not be separate for the Indian companies. The codes of manufacture stipulated by an international court is different for nuclear equipment as compared for other equipment.
Do you think that India is prepared to open up for the private sector in nuclear than before?
We are always been in the private sector since the first reactor was set up. Nowadays, setting up reactors depends now how the policy comes out. If the policy is such that it prevents any manufacturer from stepping in then they will not step in.
So who would be defining this to the industry?
NPCIL will give contracts to us as they are our customers. They have to define what are the conditions of contract.
Post 2010, was there any order booking by the company?
We have not signed any contracts with any terms which are against our interest. With the new provisions, what we want is a clear definition. People who are just entering the nuclear field have tremendous experience of nuclear power. Let them decide how they want to operate.
L&T has full range of capacity for developing a full-fledged nuclear reactor. Please let us know more about the services offered?
We not only develop Indian reactors but also develop foreign ones. There is big difference between the Indian and foreign design. Indian design is based on heavy water moderation whereas the light water reactor and boiling water reactor are based on pressurised water. Both boiling and pressurised water requires very large and heavy reactors. With the workshop at Hazira, we have acquired all those capabilities and qualities and ready to deal with any specification provided by the operators.
What kind of nuclear equipment are exported from here?
In case of nuclear, we are supplying dry storage of spent fuel storage systems. We manufacture two equipment: canisters and casts. We started exporting these equipment to US and now we have received export orders from Europe and Switzerland. Earlier, we used to received orders from France also. We make containers as per international nuclear standards. We are a supplier to nuclear power plants outside India, because we follow international standards.
Apart from US, Europe and Switzerland, which are the other countries you export?
As said before, we can't design plants. Suppose Areva puts up a plant in any country, and for supporting that plant if they require canisters, we can supply it any where.
How much has been invested in your Hazira plant so far?
We have invested at Hazira plant over a period of time. We have invested close to Rs 2,000 crore in the last two years.