Engineering giant Larsen and Toubro (L&T) is confident of bagging the construction rights of at least one of the two airports which were handed over to private parties recently, chairman and managing director A M Naik said on Friday.
Says it would get the construction work of either the Mumbai or Delhi project.
MUMBAI: Engineering giant Larsen and Toubro (L&T) is confident of bagging the construction rights of at least one of the two airports which were handed over to private parties recently, chairman and managing director A M Naik said on Friday.
“Though we may not have won the operation contract of the airports, we are confident that we will end up building at least one, if not both, the airports. We are in serious talks with both the operators (GVK Group for Mumbai airport, and GMR Group for the Delhi airport),” Naik told shareholders at the company’s 61st annual general meeting here on Friday.
Naik has reasons to be optimistic. L&T is involved in some way or the other with three most recent airport projects. The company has a 19% stake in the Bangalore greenfield airport, is the constructing contractor for the Hyderabad greenfield airport for the GMR group, and has already handed over the Calicut airport.
Naik said the company has earmarked Rs 1,200 crore towards capital expenditure for the ongoing projects, which may rise to Rs 1,700 crore if some other proposals, currently under consideration, are taken into account. Even before its shipyard at Hazira in Gujarat has become operational, the company is scouting for a location for a new shipyard capable of building bigger ships, for which a decision would be taken in the next two-three months.
“We have an order book of Rs 600 crore and are close to getting orders worth another Rs 400 crore. So even before the shipyard project goes on stream, we would begin with a backlog of Rs 1,000 crore. But this (Hazira) facility is for smaller ships, and we are looking for a new facility where bigger ships can be built,” he said. The capex would be location-dependent and be at least Rs 500 crore.
The company has an order book of about Rs 28,000 crore, of which Rs 4,000 crore is from overseas projects. The hydel project order backlog stands at Rs 2,153 crore. “We have an order backlog of Rs 270 crore from nuclear power reactor. This is expected to grow at a CAGR of 35-50% over the next 4-5 years since there is a rising interest in nuclear power all over the world on account of rising oil prices,” Naik said. The company is aiming for 25% revenues from overseas markets in the next few years, up from 17% currently.
Naik said although L&T has till now kept away from construction of special economic zones (SEZs) in the country, it may enter the race. “There should be proper system for SEZs. Today it is a land dealing business. We may enter the business if it becomes streamlined. If we feel it would exploit our skills, we’ll explore that.”
L&T is setting up three manufacturing units in China. “Our objectives are three-fold. One is to compete in the Chinese market. Second is to compete globally. So we’ll manufacture low-end products there while supplementing them with our high-end products manufactured in India and then selling to the world. And third is to explore China as a source of cheap materials like forging and casting,” Naik said.
On the recent floods in Surat, he said “We lost about Rs 20 crore due to the floods, mainly due to lost man hour. Material worth Rs 2.5-3 crore has been washed away, for which we are talking to insurance companies.”
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