Reported By:
| Edited By: Swati Khandelwal |Source: DNA |Updated: Jan 14, 2019, 05:35 AM IST
Anil Manibhai Naik, group chairman, Larsen & Toubro (L&T), speaks about his hopes for 2019, business opportunity from the international markets and growth drivers for the conglomerate during an interview with Swati Khandelwal of Zee Business.
This year’s elections are going to be different as Prime Minister Narendra Modi, who is a tough taskmaster with great capabilities, is being pressurised from all sides by the Opposition, which does not like his style of working. The current situation is Modi versus all, thus this election is going to be tough for Modi. That’s why I feel that the election results must be a good one, and Modi should retain power. Or else things will nosedive, and we have experienced a situation twice where the prime minister has been changed in six months. In the second scenario, the Congress, which can win maximum 100-125 seats, will have to form the government with support from 12-15 parties, which is not good for the country.
I have told my senior leadership team to go for cost-cutting and be competitive, and look for opportunities, within and outside India. I am cautioning my team for the next fiscal. I am asking my team to bring an ample amount of orders so that we can survive in the next fiscal.
We are focused on services specifically, as our financial services have grown 50-60% on an annual basis while the technology and information technology (IT) sector has grown 20-25% and we are pushing it because its growth story is not dependent only on Indian economy, but on the global one. Thus, we are increasing our presence on the IT front, and you may get a chance to see our presence there in the next two years.
They are going to be a strong pillar of our growth. In addition, manufacturing unit (heavy industry), which constitute only 6% of the company is the second pillar due to the order book it has at present. In fact, it didn’t have such an order book in the last five years. Its order book is full for next 18 months. Fortunately, hydrocarbon projects will play a pivotal role for us this year as we have a number of projects, national and global, in our list. In fact, we had a budget of Rs 20,000 crore but can secure an order book of Rs 28,000 crore. This means that the first half of the next financial year will remain sound for us. But there is a question about funding the infrastructure segments, which are the biggest constituent of our business.
Yes, it can have an impact, but I feel that this will not happen as we are well covered up to 90%, which means we will have to push ourselves to achieve the remaining 10%.
We will look towards the new-age technologies, such as artificial intelligence and Internet of Things and areas of its application. We will put our hands in the segment only if it can have a contribution of minimum $1 billion to our business. And, you would have seen that IT has turned a $2 billion business for us. And, interestingly, the services sector has a contribution of almost 50% to our net profit, that is, if we earned a profit of Rs 9,000 crore, then the service sectors had a contribution of Rs 4,500 crore. We are eyeing the next generation of technology in services with an aim to turn it into a $1 billion unit. We are working on a plan on that front.
We are on course, and will try to better.
The market is in a bad shape and that’s why no one is ready to buy them. But in the recent past, we have sold a small business for Rs 43 crore. We want to sell additional four-five units in 2019, even by reorganising them. It will help us in utilising our resources and talent for something that we want to do in future.
We are an NBFC, and there was a need for being more balanced, and now we have realised what to push and what to reduce. I would not like to talk a lot on that front, but will make sure that we will try to reorganise that company in a way that it will grow even stronger in the next two-three years.
We have created a different team for the prospective planning of 2026, and they are engaged in creating new ideas that should be done. In fact, there has not been a single year in the past 20 years when we haven’t done something new at L&T. And, 88% of things happening in the company started from a blank sheet. So this is also bothering us that what we can do on this front, and that’s why have constituted a committee on the matter, which reports to SN Subrahmanyan. I have also participated in one of their meetings. In fact, they are meeting once every 2-3 months. By March 2020, we will have a rough blueprint on the issue. So that we can prepare a strategic plan from the perspective plan by 2021.
We are looking towards the service sector like IT and engineering. We have removed all manufacturing units, which were not hi-tech in nature, and the remaining units are available only with 4-5 companies across the world and none of them is functional in India. Slowly, we will bid goodbye to commodity projects like ordinary road and highway development projects, and move to big and complex infra projects like development of Statue of Unity, the 17-km long underwater highway between Navi Mumbai and Mumbai, coastal road and a bridge on the Brahmaputra.
If seen from a perspective of complexity, then we must not be there. But we have certain social responsibilities, but will enter affordable housing only if we get a chance to build one lakh houses.
Airports is a complex business and thoroughly integrated. That means multiple systems work simultaneously and is critical from safety angle, that’s why we will keep participating in it and hope 2-3 airports will be added to our portfolio soon.
