L&T plans to increase its workforce by about 10% next year, says CFO R Shankar Raman

R Shankar Raman, CFO, L&T, added that while military escalation in West Asia has led to supply chain disruptions, he does not expect a long-term slowdown in order inflows from these countries

Larsen & Toubro (L&T) has increased its workforce by 10 percent in the past year, and the company plans to expand it by another 10 percent next year, L&T's Chief Financial Officer (CFO), R Shankar Raman, told Moneycontrol in an exclusive interview.

"Between December 2022 and 2023, we added about 10-11 percent to the workforce in the main engineering. Going forward, I think the number will not be substantially higher. It will be driven by what happens on the attrition (front) because of talent competition. But largely, it will be around the 10 percent level," Raman said.

He added that L&T is looking to increase its staff in West Asian countries, especially Saudi Arabia, where it has set up fabrication shops.

As of March 31, 2023, the company had 49,039 permanent employees, of whom 3,493 were women and the remaining men. As of the same date, the company had 228,818 workers on a contract basis.

"The Saudi government is very keen that we also use these opportunities to promote the skill level of local people. So we have set up fabrication shops, etc., in Saudi Arabia. We've been encouraging Saudi graduate engineers to train with us," Raman said. He said that L&T has an order book of $16 billion in Saudi Arabia, and the company will look to onboard both senior leadership and on-floor talent in the country.

Raman added that while military escalation in West Asia has led to supply chain disruptions, he does not expect a long-term slowdown in order inflows from these countries, especially Saudi Arabia.

"Their 2030 vision has not been abandoned. I am looking at it as a stocktaking, like we do in any interim-level projects. We have almost $16 billion worth of projects to be executed for them, and that is going to keep us very busy for the next two and a half years," Raman said.

Raman, as part of L&T's post-December quarter earnings (Q3 FY24) call, said that L&T will exceed its revenue and order inflow targets for 2023-24 due to the strong order momentum it is seeing at the moment.

The engineering major, at the start of 2023-24, had said that it expected revenue to grow by 12-15 percent and order intake by 10-12 percent in the current financial year.

“We are well positioned to exceed our guidance and are likely to end the current financial year with 20 percent growth in order inflow for the full year and high teen growth in revenue,” Raman had said on January 30.

L&T reported a consolidated net profit of Rs 2,947 crore for the December quarter of FY24, up 15 percent from the year-ago period, on better execution of infrastructure projects and continued growth in the IT and tech services portfolio.

Revenue zoomed to Rs 55,128 crore, 19 percent higher than last year, the company said in an exchange filing on January 30.

The Union government continued with its capex push in the Interim Budget for 2024-25 but refrained from major announcements on infrastructure projects.

In her shortest budget speech ever as she presented the interim budget of the government on February 1, Finance Minister Nirmala Sitharaman said, "Building on the massive tripling of the capital expenditure outlay in the past four years, resulting in a huge multiplier impact on economic growth and employment creation, the outlay for the next year is being increased by 11.1 percent to eleven lakh, eleven thousand, one hundred and eleven crore rupees (Rs 11,11,111 crore). This would be 3.4 percent of the GDP."

While this 11 percent increase in capex may be lower than the 15 percent many in the industry were expecting, it is still significant and will spur infrastructure growth.