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L&T - MHPS

Company: L&T – MHPS

Background:
L&T – MHPS is a subsidiary of L&T Ltd. with its businesses in manufacturing turbine and
supercritical boilers for thermal power plant. The company taken for study is the L&T – MHPS
Boilers Pvt. Ltd. It’s a 51:49 JV between L&T Ltd. and Mitsubishi Hitachi Power Systems and
manufactures Supercritical boilers, pulverisers and pressure parts for Coal fired power plants. It
has the largest manufacturing facility at Hazira, near Surat, Gujarat. The company puts a lot of
emphasis on the system driven approach and this has led to the development of a strong
technical team with proficiency in supercritical boiler fabrication.

Offerings:
The company mainly works on the Engineering, Procurement and Construction(EPC) projects
and hence provides equipments such as Pulverisers, pressure parts, auxiliaries, Boiler
Management system (BMS) as a part of the EPC project.

Segmentation:
The customer segmentation is done on the types of accounts.
 1) Complete EPC project: Most of the projects undertaken by the company are on
complete EPC basis wherein the client (private or government) file a tender with L&T –
MHPS for a contract of around 5 years (time required for the complete EPC Boiler
project)

2) Annual Maintenance Contract (AMC): The company has AMCs with many of the
Thermal power plant owners (private/government) to provide spares for boiler like
relays for Boiler management system, blade pitch and actuators for fans of the boilers,
etc.

3) Based on environment norms’ requirement: Due to the stringent environment

regulations, certain power plant clients want to reduce the pollution emerging out of
their plants and hence L&T – MHPS provides a combustion modification device which is
used to reduce the same.

Pricing:

The pricing strategy is decided basis the type of accounts.

1) If the company goes into a full EPC project tender with the client, cost plus pricing
strategy is followed. Pricing is agreed after the tender has been agreed upon by the
Sales & Tendering team and the client after various technical specifications have been
decided by the Engineering team. The L1 (lowest bid) is selected by the client after
receiving various proposals.
2) If the company provides some of the equipments like pulverisers, boiler management
system, etc. competitive pricing is followed. This is done after the Supply chain
management team asks the quotation from three vendors and selects the best supplier
in terms of cost.

Sales process (For EPC project):

L&T – MHPS uses the strategic selling process wherein it doesn’t sell any product but comes in
a contractual agreement with the client to build the entire EPC Boiler project. There is no Sales
team dedicated as such but many of the stakeholders in the value chain which form a part of
the entire agreement. The initial tender is floated by the client (private/government) to the
various potential companies stating the technical specifications and details of the
timelines/schedules required for the entire project. The Sales and Tendering (S&T) team studies
the details of the tender and makes a Pre Bid for the entire project. This is then floated to the
Engineering team which checks all the design and other technical specifications as required by
the client and then suggests modifications required, if any. A detailed Bill of Quantities(BOQ)
and a detailed Scope of Work(SOW) is prepared and the relevant documents are passed on to
the S&T team which studies them carefully and the Project Management team team is asked to
check the price according to the current rate and the rates of the previous projects. The client
also asks the proposals from other potential companies. Techno commercial bids are given to
the client. The client then arranges meetings with the potential companies whom the project
can be awarded and the Lowest Bid (L1) after meeting all the required specifications is given
the project.

Sales Process (For Equipments):

The Engineering team gives the design and other technical specifications and sends it to the
Project Management Group (PMG). The PMG team then decides and prepares a complete
schedule of all the activities required for the procurement of the equipment parts. It also sets
the pricing range and prepares a vendor list who can be potential partners for procurement of
parts. The entire document is then passed to the Supply chain management team (SCM) which
selects three vendors after they have matched most of the design specifications and the price
range. The vendor sends his specifications and the SCM team passes this to the Engineering
team which then prepares a Technical Evaluation Report (TER) for the three vendors post which
the best supplier meeting the specifications and having the lowest price quotation is selected.

Buying centre: (EPC project)

1) Initiator: The Sales & Tendering team initiates the overall buying process after receiving
the tender from the client
2) Influencer: The Engineering team which looks after the various technical and design
specifications of the project
3) Gatekeeper: The Engineering team as it has the control of the documents
4) Decider: Client makes the final decision after various proposals and giving the project to
the lowest bid L1
5) Buyer: Client, as he makes the final decision whether the project be given to a particular
company.
6) User: Client, as he is getting the EPC project getting build to run the power plant.
Buying centre: (Equipment)

1) Initiator: Engineering team initiates the overall buying process after designing various
technical specifications
2) Influencer: The Project Management team which decides for the complete schedule,
pricing range and the vendor list
3) Gatekeeper: The Project Management team keeping control of the various documents
4) Decider: Supply Chain Management and the Engineering team after deciding the lowest
bid L1 of the supplier after he meets the desired specifications
5) Buyer: Engineering team after the TER has been prepared
6) User: Client, as the equipment will be installed at his plant

Marketing:

The company doesn’t usually advertise or use any marketing materials as such as the major
account of the company is the complete EPC project work for clients. However, while making
the pitch for the entire project, the company uses some standard pictures which are shown
below:

It is planning to launch a new brochure comprising of the detailed projects, the milsetones
achieved, its awards and recognition, safety aspects and other related paramters to show the
client while making their sales pitch for the entire project.