While the global meltdown has severely affected the Indian economy as well with several sectors like the automobiles registering a significant slowdown, happily, not all companies seem to be getting hit.

Larsen and Toubro - ECC Division belongs to the latter category. Member of the L&T Board and President–(construction), K V Rangaswami (KVR), pointed to substantial orders continuing to flow from the minerals and metals, water supply, infrastructure, electrical substation and other sectors. The flow of orders in the current year is estimated around Rs. 34,000 crore. Revenues during the current year are anticipated around Rs.18,000 crore, a handsome jump of around 40 per cent over Rs. 13,500 crore it earned in 2007-08.

New strengths in airport construction...

This leader in the infrastructure and construction business has several achievements to its credit and each year, apart from consolidating and growing in sectors where it had already specialised, the company also acquires new and rich expertise in emerging areas. During the current year, L&T completed two major airports at Bengaluru and Hyderabad and also worked on the runway at the Delhi International Airport (the longest in Asia). Work at the modernisation and expansion of the Mumbai Airport is proceeding at a fast pace.

Specialist builder of steel plants

The company has been a specialist builder of steel plants. During the year, the H-blast furnace (the largest in India with a capacity of 2.5 MTPA) was completed for Tata Steel’s Jamshedpur plant. KVR pointed to completing this in just 25 months. Concurrently six blast furnaces and six sinter plants are constructed by L&T, he added.

Large capacity mining equipment...

Till recently, the large 1400 litre capacity bucket wheel excavators for mining lignite at Neyveli used to be imported or assembled in India by German companies like Krupp and O&K. This year, L&T completed supply of three numbers of BWEs valued around Rs. 400 crore.

The company continues to excel in highway projects. The Panipat elevated corridor, considered an engineering marvel, was completed six months ahead of schedule. In Tamil Nadu the Krishnagiri–Thopur ghat road project is another such completed.
KVR pointed to his company engaged in construction of several large buildings and factories, including a hotel project for ITC in Chennai, an airport hotel at Bengaluru to be managed by Oberoi, Thandur (AP) cement mills for India Cements, an IT park and a hotel for Godrej, the Mumbai Metro monorail project and many more.

L&T is a leader in water supply schemes, water recycling plants, power distribution systems, power plant construction and erection. In the petroleum sector, L&T is busy completing the 100 per cent export refinery at Reliance SEZ at Jamnagar. Along with an existing refinery of similar capacity, Jamnagar will house the largest refinery complex with a throughput of 60 million tonnes. L&T also completed the long east-west pipeline of Reliance connecting Kakinada in the east coast to Hazira/ Jamnagar in the west.

Towards a Rs.50,000 crore turnover

Rapidly marching towards a 50,000 crore turnover, L&T has restructured its management by setting up separate, wholly-owned entities to facilitate optimal-size management. The ECC division has been restructured into four entities with each having separate boards of management. “Personnel have been transferred and separate office spaces have been allotted. Each of these will be as large, if not larger than, the second largest construction company in the country. Such restructuring provides opportunities for talented managers to become members of the board and also work in a spirit of competition and strive for excellence,” explained KVR.

The concern for ecology and environment is in evidence in the company releasing its first corporate sustainability report for 2007-08. The focus will be on construction of green buildings, measuring and monitoring power and water consumptions.
L&T, which introduced the concept of ready-mix concrete in the country, set up over a hundred RMC plants across the country. These made for a lot of synergy so long along as L&T was also a large producer of cement; but after the cement business was hived off to the Birlas, this synergy was lost. Hence, during the current year, L&T has sold its RMC business.

Foraying into new areas

The company is foraying into newer areas. KVR took the initiative to locate in Tamil Nadu the shipyard-cum-port project, an important diversification planned by chairman and managing director, A M Naik. The project envisages construction of merchant vessels and ships for the navy, ship repairs, as also a modern container port. In the context of the current recession in the shipping industry, the project has been reconfigured to focus on vessels for defence like naval frigates and on ship repairs. KVR said that work on the shipyard will commence in March and will be completed in 30 months at a cost of around Rs. 2000 crore.

If one witnessed last year a massive diversification into the power sector including the manufacture of equipment and generation, chief executive Naik is now vigorously working to acquire Satyam Computers. This acquisition will help L&T build great strengths in the IT sector where L&T Infotech is already an active player. Along with the large forays Satyam has made into real estate (Maytas of the Satyam Group has more than Rs. 30,000 crore worth of projects in AP alone), L&T has rightly identified the gains that will accrue through such an acquisition.

All these augur well for the construction and engineering giant, reinforcing KVR’s confidence in maintaining a growth of at least 25 per cent even in the present phase of slowdown with significant cut backs on investments in infrastructure.