Larsen and Toubro Ltd (L&T) is working on a template to more than double its international order flow this fiscal.
This, it feels, will go a long way in maintaining operating profit margins at 11-11.5% this year, given an overall financial weakness affecting the Indian infrastructure industry.
A M Naik, group executive chairman, L&T, said the management has worked aggressively on building a strong organisation outside India to bag infrastructure projects. “We are targeting order inflows of Rs30,000 crore in this fiscal. As challenges become more intense in the domestic market, we are focusing overseas.
Our strategy is to do as many projects in international markets as possible. This will help us overcome the overall slowdown experienced in the domestic market,” he said at the company’s 68th Annual General Meeting in Mumbai on Thursday.
In the next few days, the company is expecting Rs3,500 core worth of orders from Qatar in the power transmission and sub-station space. Another Rs1,500 crore to Rs2,000 crore worth of road projects from Doha, in addition to a metro project, is in the works.
The company sees a bulk of these international orders coming in from the Middle East. It’s also targeting the Commonwealth of Independent States (CIS) and Far East markets, thus widening its scope for any overseas business opportunity. The current domestic to international order flow mix in the company now stands at 75:25.
In fact, the infrastructure major has started to sharpen its focus on international orders over the last couple of years.
For instance, its order book stood at Rs6,000 crore, excluding IT, engineering and exports of products, in fiscal 2012 and the company achieved a figure of Rs12,000 crore in the last fiscal.
There have been some earlier reports that L&T is weighing divesting stake in Dhamra Port Company Ltd – L&T currently owns 50% through its subsidiary, Infrastructure Development Projects Ltd (IDPL) and the balance is owned by Tata Steel. Clearing the air, Naik said discussions (for IDPL stake sale) are still going on.
“In the current economic situation, valuations tend to get depressed. We are not in a distressed sale position. If we get the right value, we will go ahead with plans to dilute up to 20%,” said Naik.
The company management has clarified that it has no overseas fund raising plans citing strong cash flows and will be able to meet funding requirements. At a group level, the company debt stands at Rs60,000 crore, much of which comes from financial services and concessions business.