Constructing T2 in centre of Mumbai was a challenge: L&T

Below is the edited transcript of AM Naik and SN Subrahmanyan interview on CNBC-TV18

Q: There have been delays. This has been a challenging airport to build, if not difficult. There are issues of slums. There are issues of an existing airport that is running while this is being built. What would you identify as the key challenge that L&T faced in putting this project together for GVK, especially given the nature of the project that it is?

Naik: It is more appropriate if I would. Any running airport where every one minute a plane lands or takes off, you can't even shutdown for more than few hours.

There are lots of other challenges which come with the baggage of running an airport. I would rather have my colleague Subrahmanyan who has faced these challenges day in and day out to speak on it.

Q: What would you identify as challenge - cost, time, slums. Slums affect your construction design, it affects the ability to design something that may be viable but you can't because you can’t get rid of that. So, I am just curious to know what you would identify as a big challenge?

Subrahmanyan: The single-biggest challenge was to put up this massive infrastructure in the centre of Mumbai city. It is not easy because you had an existing airport, it is a brownfield development, therefore and you had keep the present Sahar Airport running.

We broke one third of it and then built this massive building right at the centre. One could hardly see it coming up and many people have wondered where this building was coming up. Just imagine the logistics, everyday in the morning 15,000 workers coming in and moving out, 850 engineers coming in and moving out. On top of it nearly 3000-4000 odd sub-contractor workers and others moving in and going out and all done without too much of hullabaloo around the city and without creating too much of fuss and other issues.

Beyond that, there is an operating airport and therefore you had workers and staff working. We had to put barricades all around, there were very strict security and airport rules on what we do and what we should not do -- the issues on dust, on materials flying around, on safety, on airport safety, issues on light sometimes. There was a Lufthansa flight which nearly landed and one of our sight lights was beaming up and the pilot took off and the airport company decided to debit us with that.

These were things which were done unknowingly but it was a security hazard. So, day in and day out to live with that was extremely difficult.

Also, we had Chhatrapati Shivaji Maharaj’s statue right somewhere out here where we are sitting. It has a lot of sentimental value around this part of the world and one had to be extremely careful in looking at the sentiments and handling that particular matter. Our boys did a brilliant job in doing the airport around the statue and at the right time moving it out to a much better location where one could see it from all over the place now.

Also the fact that we are putting up an edifice like this, which is something very rare around the world -- such magnificence --- and to work with GVK group which has extreme presence in hospitality (one of their hotels in Hyderabad is rated amongst the top 5 in the world) and when they expect that kind of finishing magnificence and that kind of articulation of their vision is not easy from a construction point of view. We had to come out here to get that kind of finish and that kind of polish which you see out here.

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Q: On your balance sheet or on your profit and loss account how does it reflect or show up?

Naik: It doesn’t make it red that is all I can.

Q: It doesn’t make it red?

Naik: No.

Q: Are margins high for projects like this or because of the time delays, etc?

Naik: No, not at all. Any infrastructure project doesn’t have margin and we work with them in open book, fixed margin. Therefore they know exactly, completely, transparently what price are we charging and what is the cost being incurred.

Q: Give me a sense of how much you may have earned from a project like this?

Naik: I don’t think we have earned much. I can only tell you we have not lost anything.

Q: But yours is a large company so what do you mean by much like a few Rs 100 crore, in the 10s?

Naik: No, I wish I could.

Q: I don’t believe you don’t know, you may not want to share with us is a different thing altogether.

Naik: You see our balance sheet day in and day out. It is not more than 6 percent profit after tax. All that we wanted was that 6-6.5 percent protected, that is all.

Q: Now what, when do you get the domestic airport integrated with the international airport? How long is that going to take?

Subrahmanyan: No, that is for the owner to decide. We have not completed this airport as yet. As you know it is star shaped, so, we have completed one part of the south; it is called the south west sphere and the central portion is sphere. There is one more portion which is similar to the south west sphere on the other side.

Q: Which is the existing international airport?

Subrahmanyan: Yes, so we have to break the balance two third of the Sahar airport and start the phase 2 or phase 3, as well call it; we need to do that. There are some portions on the backside along the entrance which needs to be done so that the whole airport is complete.

Q: Do you have a construction deadline?

Subrahmanyan: It will take another six to seven months to break the existing Sahar. They have to move their existing operations in this, integrate certain part of the domestic into this and then only we could start that. So, I would say, give another two years before that is done; six to seven months to break this and then 1.5 years to do that.

Naik: That is for expansion. There are four legs. Two are long legs; one is done and two are short legs which is done let us say two third. It will be extended by one third but doesn’t affect the operations.

Q: To hit full 40 million might take you two years in terms of capacity? This airport is meant to have a 40 million traveler capacity.

Naik: Even today it can handle 30 million. The way it is now it can handle 30 million which is the current traffic. 10 million is for future.

Q: How many such projects in India are currently on your order book? How many such iconic large projects is L&T doing?

Naik: I think there are projects with different dimensions. When you take up a hydro power in a very remotest of Himalayas where you can’t even approach that is a kind of project which is also iconic or rather so complex to do it.

There is another project we are doing you should visit which is the railway station development project – a first of its kind in India in Seawood, New Mumbai. At least you should see the architectural aspect how it will look like. It is six kilometers from the new airport as and when it comes up. It will certainly be a tourist destination. Different projects have different complexities, different dimensions but we enjoy doing something which not many can do.

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