After years of deliberation, the government is poised to greenlight the Nuclear Power Corporation of India (NPCI) to divest its 26% stake in L&T Special Steels and Heavy Forgings (LTSSHF) to its majority partner, Larsen & Toubro (L&T).
Despite LTSSHF grappling with a negative net worth attributed to prolonged losses, sources revealedthat L&T is inclined to pay ₹170 crore, equivalent to NPCI’s principal loan amount to LTSSHF. An L&T spokesperson refrained from commenting on the matter. With a 74% ownership stake, L&T has weathered the challenges posed by delayed equity infusion, leading to LTSSHF’s net worth plummeting to (-) ₹2,573 crore as of March 31, 2023.
The impending transaction, subject to approval from the incoming government following general elections, is perceived as beneficial for NPCI given LTSSHF’s negative net worth, according to a government official.
Analysts highlight the promising future prospects for LTSSHF, particularly amidst the resurgence of global orders post the Russia-Ukraine conflict, which underscored the importance of energy security for developed nations.
LTSSHF, commissioned in 2012, plays a pivotal role in bolstering India’s nuclear programme by ensuring a robust supply chain of critical forgings. Additionally, the facility spearheads development endeavors for next-generation reactors in the nuclear and hydrocarbon sectors.
Government officials emphasized the strategic importance of LTSSHF as one of the premier forging firms globally. The acquisition of NPCI’s stake by L&T is poised to bolster LTSSHF’s trajectory towards becoming a key supply chain partner across diverse sectors.
Amidst NPCI’s cessation of fresh capital infusion, L&T has single-handedly funded losses, prompting considerations for the divestment. Officials contend that NPCI’s exit would not impede its ability to procure forgings from LTSSHF.
Situated in Hazira, Gujarat, LTSSHF boasts a state-of-the-art 65,000 sq meter integrated facility, equipped with cutting-edge infrastructure including a 125-ton Electric Arc melting furnace and India’s largest hydraulic press with a capacity of 9,000 tons. The facility’s comprehensive capabilities position it as a leader in South-East Asia’s forging landscape, consolidating its stature as an industry pioneer.