 "Larsen & Toubro")
Last month, Larsen & Toubro’s (L&T’s) hydrocarbon division undertook a multi-city walk-in drive in India to hire for project locations spanning three Indian states — Gujarat, Maharashtra, and Tamil Nadu — and one overseas location — the Kingdom of Saudi Arabia, underlining the significance of west Asia for the Indian engineering and infrastructure giant.
As of June, L&T had an outstanding order book of Rs 4.12 trillion, of which orders worth Rs 1 trillion, or about 25 per cent, originated from west Asia.
This considerable share was largely due to a construction surge in Saudi Arabia, the company’s executives and industry insiders indicated. In comparison, west Asia accounted for just 11.4 per cent of L&T’s order book of Rs 2.94 trillion at the beginning of FY20.
By 2023, L&T has become one of the top EPC (engineering, procurement and construction) contractors in west Asia. Localising offices, staff, and establishing strategic partnerships may have strengthened L&T’s foothold in the region.
To address funding needs, L&T has also explored non-fund-based (NFB) limits in these markets.
Anup Sahay, executive vice president (corporate strategy and special initiatives), L&T, attributed the company’s success in the region to a localised approach.
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Anup Sahay highlighted factors such as establishing local offices to be closer to clients, senior manager placements to gauge expectations of the market and clients, and forming alliances with local business groups.
The company data reveals that, on average, more than 10,000 employees have been deployed in west Asia over the past three years for various projects.
A 2023 Deloitte report on the GCC (Gulf Cooperation Council) construction market states that contracts worth approximately $94 billion were awarded in 2022. This marked a year-on-year decrease of over $20 billion. Despite the overall dip, Saudi Arabia stands out. With contracts nearing $54 billion, Saudi’s project market now surpasses those of other GCC states combined.
L&T is strategically positioned in this promising segment, procuring orders across metros, transmission lines, water resources, gold ore processing, oil and gas, and renewable energy, predominantly from Saudi Arabia.
However, challenges persist. Sahay acknowledged issues related to manpower, particularly the work visa process and deployment timelines. Some countries impose nationality-based employment caps, which can hinder establishing a diverse workforce. The availability of skilled labour also poses a challenge for L&T’s vast order book. To address this, Sahay mentions increased mechanisation, automation, and offsite production, supplemented by the in-house creation of specialised construction and installation equipment.
The Deloitte report also raises concerns about the potential overheating of the Saudi project market due to supply chain pressures and the heightened demand for basic materials and logistics.
Beyond the Rs 1 trillion orders reported from west Asia up to June 2023, L&T is purportedly slated to handle a $3.9 billion package for Saudi Aramco’s expansion at the Jafurah unconventional gas production project in Saudi Arabia. However, this order win remains undisclosed by L&T.
L&T’s ambition in the region remains robust. Sahay expressed the company’s interest in railway and new port development projects associated with the India-Middle East-Europe Corridor, recently unveiled at the G20 Summit. “We await clarity on the project scope and scale,” he said.
