Re bites L&T; Asks govt for relief through tax incentives

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Re bites L&T; Asks govt for relief through tax incentives

CNBC-TV18's Appaji Reddem reports that India's biggest engineering company L&T wants tax incentives to shield it from the currency's bite.

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Excerpts from India Business Hour on CNBC-TV18 Watch the full show » Larsen BSE | NSE 30/05/12 Are Mutual Funds betting on Larsen?

L&T appears to be worried about the rupee depreciation, especially when it comes to the Hyderabad Metro Rail project. CNBC-TV18's Appaji Reddem reports that India's biggest engineering company wants tax incentives to shield it from the currency's bite.

In a few days, Prime Minister Manmohan Singh will inaugurate the laying of the foundation for the Rs 16,000 crore Hyderabad Metro Rail project.

But L&T, which bagged this project, wants the central government and the state government to protect it from shaky economic conditions, especially from a falling rupee.

VB Gadgil, the CEO of L&T Hyderabad Metro Rail said, "We are looking for some help from both the central and state governments as to whether they can give some kind of relief because of this kind of unprecedented economic conditions."

L&T says a weak rupee will increase its outlay on this import-heavy project. Its initial estimates suggest exemptions or reductions in areas like import duties and customs tax could provide a Rs 400 crore buffer.

Gadgil finds it very difficult to give a number because import has not yet been decided on. "If tomorrow benefits are given, it will be percentage of that," he says adding that a rough estimate is anything between Rs 350 to Rs 400 crore.

Project-related work like road widening and land acquisition are moving fast of which 99% of the technical discussions are done. Commercial discussions with global vendors for material worth over Rs 2,000 crore have begun.

L&T is also looking at global players to place orders for rolling stock, signaling, telecom and automatic fare collection systems.

According to Gadgil, "There are players like Bombardier, BEML-Hyundai-Rotem, a Chinese company called CSR and CAF from Spain which are all in the fray."

L&T is moving quickly to ensure project deadlines are in place while costs remain under control, factors that will ensure it can complete the Hyderabad Metrorail project within the stipulated time.