Construction boom draws global majors

At least 10 foreign construction majors have set up shops in the last 6 months.

The civil engineering and construction business is booming, and multinational construction majors are making a beeline for India.

At least 10 foreign construction majors have set up shop in India in the last six months. These include Limak from Turkey, Italian-Thai from Thailand, Baelim of Korea, Russian companies Boguchangesstroy and Soyuzgidroperesstroy, Dyckerhoff & Widmann AG from Germany, Malaysian companies IJM Construction SDN and Road Builders and, Japan's Kajima and Taisei and Suzlon.

"A host of foreign civil engineering companies have turned their attention to India in the past year and with the new opportunities, this trend is expected to accelerate," said JP Nayak, director, Larsen & Toubro (L&T).

That is because projects in industries such as surface transport (roads, bridges, railways), energy and power (nuclear, hydel and thermal), housing (urban and rural), airports, shipping, irrigation and flood control worth over Rs 115 lakh crore are on the block.

Domestic majors like L&T, Hindustan Construction, Bharat Heavy Electricals, Gammon India and Patel Engineering, meanwhile, are switching their focus back to the Indian market.

"We are now shifting focus back to the home market with big opportunities emerging here. We used to be keen on international projects. But owing to government-sponsored civil engineering projects and significant infrastructure spending, we expect to clock a turnover of over Rs 2,000 crore in the next three years," predicted Rupen Patel, managing director of the Rs 750-crore Patel Engineering, which specialises in hydroelectric and micro-tunnelling projects.

To acquire a toehold in the domestic market, Italian-Thai has acquired a local company, Ksanca. Many of the other foreign companies are in talks with local companies to jointly bid for projects. Typically, the foreign company provides the technical expertise, while the Indian partner handles the legal and other domestic issues.

According to a Mumbai-based analyst, power distribution and transmission companies like ABB, Crompton Greaves and Siemens, too, will gain substantially from the boom.

"Almost all engineering and civil construction companies have healthy order books. The industry is expected to remain strong over the next two-three years. However, it will take time for the swollen order books of these companies to translate into actual revenue," he added.