So is it time for L&T to list abroad?
I am against listing abroad. Today the whole world wants to come here, so why should I go there? The price-earnings multiple we get here is much more. Secondly, you don’t get the price for the brand value of L&T. Very few know about us in the US. They’ll compare us with GE and Bechtel, and say we are a small company. Companies like Infosys went there purely because of labour arbitrage.
They are respected in the US?
But does Infosys have the technology?Can they do what L&T can? Can they build India’s defence, build ships, missile launchers, nuclear plants, satellites or radars? No.
L&T is one among eight companies in the world who can.
On defence equipment? You are still awaiting Raksha Udyog Ratna (RuR)?
That is the Leftist doing. We are the only company without the RuR. We are already working with the defence -aligned to India’s national and defence research laboratories. We used to come up to prototype, and lost money throughout the late 80s and 90s. We were doing it as L&T is committed to building India and India’s defence.
Even as the government talks about privatisation, the RuR is not forthcoming. The defence ministry is very clear that while RuR is getting delayed let the defence programmes go to whoever has done prototypes.
Can’t L&T take advantage through the Offset Agreement?
All this is big talk. There has to be a lot of push from the government to get these foreign MNCs, who get the defence orders to comply with the Offset clause. In the end, for whatever reason, it invariably gets converted into counter trade. Offsets become counter trade and companies export oil, tea and commodities from here.
Some are trying to convert Offset to IT engineering outsourcing. Why include that?
Even if you have not sold, how can you convert jobs that you do at $100 an hour. The government has already diluted it by including outsourcing. This is how they have taken Infosys, Wipro and TCS in the RuR. I can understand if they were working for India’s defence programme!
Except for TCS, which does defence-related work because it acquired CMC, who else does it? Forget defence, Infosys is so focused on making 26% profits, their India revenue is less that 1.5%. So India doesn’t benefit with its own people. This makes me angry. Now they say they are looking at India and China, forced by their profitability issue. Not because they have any love for our country!
Who is fighting the MNCs —Schneider, Siemens, ABB, GE? We beat them hollow with our own products.
L&T is the pride of India. Others may make more money than us. At least (the) stock market is recognising us. Secondly, L&T is No. 1 in whatever it does — other than the power sector, where BHEL started 50 years ago at the cost of L&T.
Why at the cost of L&T?
In 1981 and 1984, we were not given a licence. I asked for the last time in 1989, and it was denied. Today the country is dependent on others, and everything is coming from China.
How do you manage to complete you projects on time even as MNCs and softwarecompanies poach your youngsters?
You are touching my boiling point. I took full control of L&T only seven years ago. I spent the first three years in reorganising and restructuring L&T — the getting ready kind of thing. In 2003, I demerged cement. The L&T stock was valued at Rs 4,000 crore including cement, which was later demerged. Today it is Rs 1,45,000 crore, without cement - a32 times appreciation. The Sensex then was at 2,500. It has gone up eight times, L&T has gone up 31 times. So I have outperformed the Sensex 3.5 to 4 times.
If you compare other companies’ performance versus the Sensex, you won’t even find five like mine. Secondly, many of these companies are very focused. Bharti Airtel in telecom, Tata Steel in steel, Reliance in petrochemicals and refineries and Reliance ADA group in energy and telecom. Not a single company in our sector in the whole world will enjoy a market capitalisation appreciation —now $27 billion — like us.
You can now use your equity for acquisitions?
We don’t want to make any major acquisition outside India. I don’t want to make acquisitions for the heck of it. L&T is deeply focused in building India. I would rather acquire two more companies in India. Why should I put my talent in building America. I’ll acquire a technology company if there are opportunities.
ABB Lummus was one foreign engineering company, according to investment bankingcircles…
Why should I put $3 billion in any company which has no role to play in India?
Talent drain is India’s biggest problem. Previously the drain was because the talent was hired to go abroad. Now it is due to the outsourcing industry within India. Four out of ten Indians go abroad after using India’s highly subsidised education system and 90% don’t come back. Of these, four out of five go into outsourcing.
Consequently they are only working to give advantage to the US, Europe and Japan. They are designing the product here and taking it to China to manufacture. China’s 52% GDP accrues from manufacturing. India shows only 17%. China’s manufacturing has spread into the second and third tier districts. India is shining only in 12 cities. One Chinese engineer creates 20 jobs only because of the country’s manufacturing prowess. An Indian engineer sells his man hours and fails to create any job for his fellow Indians.
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