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With the economy showing signs of revival, engineering major Larsen & Toubro has decided to go slow on its international business by restricting overseas orders to 25 per cent, a top company official has said.
"We see more prospects here as the economy shows signs of revival. We've already decided to regulate our global business between 20 and 30 per cent as there is higher risks involved there. We now want to restrict the order-inflow ratio to 75 per cent from domestic and 25 per cent from overseas markets," L&T chairman AM Naik said here over the weekend.
In 2014-15, total order inflow stood at Rs 1,55,367 crore, a 22 per cent growth over 2013-14. Out of this, international orders stood at Rs 39,116 crore or 25 per cent of the total inflow.
"During the past few years, since there was a slowdown in the domestic market, we were heavily dependent on global orders. But we want to focus more on the domestic market, even though we'll continue to be present outside to be competitive and to learn the best practices," Naik said.
L&T expects more domestic orders to come in sectors like road, hydrocarbons, heavy engineering and power, he said after announcing the financial results over the weekend.
"The government has announced construction of 100 km road per day. Even if we consider 50 km, it is a huge opportunity. Last year, eight tenders for road projects were bid out and we won all of them. Similarly, hydrocarbons sector looks promising given the government subsidy for gas and hybrid pooling," Naik said.
Naik said the reliance on international markets, especially in the hydrocarbons segment, is going to come down as oil prices have come down and many projects have been deferred in West Asia.
"The domestic market on the other hand looks better as the government is now providing subsidy for gas and price pooling. Nearly five fertiliser plants are expected to come up for bidding and we hope to bag at least two.
"We are already L1 in an IndianOil tender and a number of ONGC tenders are expected to come up soon. On the whole, we will be in a better position than earlier where we heavily depended on international orders," he said.
Naik also said though there will be more activity in the power sector, especially after the coal block auctions that enabled revival of stranded projects, the company will continue to be selective in bidding for power projects.
"The coal block auctions have cleared way for revival of half-completed power projects. These projects will now give work to construction companies. Also, some new plants are coming up. But due to high competition, price isn't attractive so we are selective in on power sector," he added.
