Looking at overseas markets to build wider portfolio: L&T

Following Larsen and Toubro's (L&T) announcement that it has bagged orders worth Rs 1,241 crore in September, the company’s Whole-Time Director & Senior Executive Vice President SN Subrahmanyan said that more positive outcomes are expected going forward. He informed that the orders have come from the building and factory space and from the railways business group.

Furthermore, Subrahmanyan said the company has taken steps to look at overseas markets inorder to build a wider portfolio, which is bearing fruit. He added that L&T continues to get a better pricing as compared to its peers. “Given the name and branding image of L&T, there is an image of completing projects on time and quality also matters. Therefore, we still do get a slightly better pricing than others in the market. What we are seeing is both a combination of both private and government orders and we hope to continue it in the same manner.” Below is the verbatim transcript of the interview Q: How did you do in the July-September quarter? Was the order book filling up a little faster than Q1? A: This order worth Rs 1200 crore has predominantly come from the building and factory space, essentially the factory space, and also from the railways business group. We are on track and I wouldn’t say there has been a major difference between Q1 and Q2. But things seem to be settling down and we see more positive outcomes as we go forward. Q: In Q1, the order flow is about Rs 19,600 crore. Before this declaration, it was Rs 9,200. So Rs 10,400 crore order is what we have in terms of the company wide order inflow, that is about 50 percent lower, do you think some of what we saw in Q1 may have been carried forward from Q4 of last year, and in that, Q2 inflows may not be as strong? A: I don’t think that was the case, of course, in contracting business, you do tendering in Q4. Therefore, the results sometimes take 2-3 months to get settled in. So, it will go to Q1 and the tender in Q1 will be carried over in Q2. We are hoping that some of the Q2 orders will get settled in the next 3-4 days as we go by. We are quite hopeful that we will be more or less on time with what we committed. Q: Does this mean this would be the run rate for Q3-Q4; you will have some visibility on people who are asking for tenders? A: There are tenders, we seem to be positive about it. We have taken steps to look at overseas markets and to have a wider portfolio, which is bearing fruit. Therefore, we are hopeful that will continue. Q: How are margins working out in the newest contracts? Is competition biting into at least at the edges? A: Competition would be there but as you are aware, we pay a lot of emphasis on negotiations and getting terms and conditions. With the government sector, completion definitely plays it part. Given the name and branding image of L&T, there was an image of completing projects on time and quality also matters. Therefore, we still do get a slightly better pricing than others in the market. What we are seeing is both a combination of both private and government and we hope to continue it in the same manner.