Larsen & Toubro is focusing on global markets to make up for the huge slowdown in orders in the domestic market. In an interview, Chairman A M Naik tells Sanjay Jog and Aneesh Phadnis no new major projects are in the pipeline and, even if Indian companies hurry up with their decisions, projects would come up for execution only in 2014-15. Edited excerpts:
What’s your assessment of the economic environment?
Right now, it isn’t a bright story. But I hope we will get over most of the issues within a year and be back on track. In order to instil confidence, political parties should strive to at least pass the non-controversial Bills in Parliament so that the country can get on with business. The Opposition should support the government in this. In the US, during times of crises, Republicans and Democrats bury their political hatchets for the larger national interest.
But that’s just a hope, isn’t that?
The Indian economy is not very export-dependent. If we can get our act together, there could be a great opportunity to grow on the back of domestic demand. If we fail to do so, it will be an opportunity wasted.
How is L&T facing the challenges?
We are doing more globally to make up for the slowdown in India. An unprecedented push is being given to our international business. We will make up for $2 billion of orders that we will lose or not get in India.
What’s your take on L&T’s domestic business?
There is no pipeline of major new projects in India. What we are executing today are those in the pipeline years ago. Since last year, no new major project has come. It takes three years to make decisions for tenders to be awarded and project execution to start. The next year is also going to be bad as projects would come up for execution only in 2014-15, even if companies were to hasten their decisions. We need to work very hard.
Will L&T be able to maintain its 15 per cent order guidance?
We are nearly done for 2012-13. In the first six months, we have had 20 per cent growth. We will maintain our guidance.
You seem to have taken charge of L&T’s switchgear business almost like its CEO. What steps are you taking to revitalise the business?
When we launched the strategic plan two years back, we had two choices — to retain the switchgear business and revitalise it, or sell it. We were losing market share and profitability. We once had 42 per cent share in the switchgear market. Today, we are down to 24 per cent. Losing so much because of non-competitveness could have impacted profitability in a big way. We chose to revitalise the business. We have undertaken product development, widened our product basket and made four acquisitions to expand our product range and improve competitiveness.