Dubai debt crisis won't have any material impact on L&T

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In an exclusive interview with CNBC-TV18, R Shankar Raman, Executive Vice President--Finance of Larsen & Toubro , spoke on the latest development in Dubai and its effect on the India markets.

Below is a verbatim transcript of the exclusive interview with R Shankar Raman on CNBC-TV18. Also watch the accompanying video.

Q: What kind of exposure does L&T have for Dubai in terms of projects and what stage they are at right now?
A: We have exposure in multiple segments in the Middle East, not particularly in Dubai, but in the entire region. And our exposures are in the areas of hydrocarbon, largely these are hydrocarbon pipeline jobs, the refinery jobs, the process plans and the platforms for the oil and gas sector that we put up. We also have a fair bit of electrical jobs for many of these electrical utilities in that region. Quite providentially for L&T, the exposure to civil jobs particularly in Dubai has been minimal. We have possibly been exposed to contracts worth in the aggregate for about USD 200 million over the last few years and most of the jobs are completed. And what is receivable from that market is largely retention amounts that are payable at expiry of the defects liability period.

Q: The fear for the market is that some of these accounts might turn slightly risky in terms of receivables due to your any of the clients that you work for even a quasi-financial troubled state where receivables might be a bit of question mark?
A: The exposure is somewhere between USD 20-25 million in terms of several retention amounts that are due which if things go from bad to worse, can become suspect receivables but these are contractually payable and exposure is in the regions of  USD 20-25 million among the various jobs that we have completed. Consequently, the impact of these receivables, even if they become doubtful of recoveries on their financial statements of L&T is not expected to be anything material.

Q: What is your assessment of whether any of these payments can turn sticky, any of these receivables as a management what is your assessment?
A: The dues are from the arms of the government agencies, so to that extent the bail out and the stimulus that we have been speaking about in various other parts of the world should come into some form of operation. Our sense now is that it could definitely be a candidate for delayed receipt but not a complete write-off.