Larsen & Toubro (L&T), the engineering and construction giant, is looking at growing the overseas component to 25-30 per cent of its order book by 2014 to tide over the difficult conditions in the Indian infrastructure sector.
At present, overseas orders account for 17 per cent of L&T's order book of Rs.1,45,768 crore (as at December 2011).
In an interaction with this correspondent, A. M. Naik, Chairman & Managing Director, L&T, said, “in terms of new projects in India, the current year, like last year, will continue to be extremely challenging.”
Exposure
L&T has gradually been increasing its exposure in the international market and securing orders.
From having no presence overseas less than a decade ago, global orders accounted for 7 per cent of L&T's order book in 2004. It gradually moved up to 17 per cent.
“We have accelerated knowing that we have a serious problem in India in terms of orders and have upped the target to 25-30 per cent by 2014. If that happens, we would have offset the challenging domestic situation as I see it,” Mr. Naik said.
With elections in several states and the model code of conduct in place, there are hardly any economic decisions being made. Mr. Naik felt the pipeline of new projects had come down significantly.
“The capital goods and project industries know about the infrastructure investment patterns a year or 18 months ahead of whatever is being now executed. It usually reflects on other industries after a year or 18 months. In India, there is little new capacity being created.”
L&T is increasing its investments overseas for 2013-14 and 2014-15 to neutralise the domestic impact, if it persists.
“We have achieved all the qualifications overseas, and if we swing even two or three mega projects, we will be fine. We have invested and will continue to do so in the Gulf, Africa and elsewhere. Today, we are present in every country in the Gulf region, from only two five years ago.”
The company has started looking at CIS (Commonwealth of Independent States) countries and has opened an office in Istanbul to oversee the company's CIS foray.
Mr. Naik said the company was in the process of opening offices in Australia for upstream offshore platforms and Brazil to target hydrocarbon equipment sector.
It is also analysing oil and gas-rich African countries and would start by looking to tap into the potential, he added.
