• Home
• /
• Business

UAE is key market for L&T, says Subrahmanyan

Dubai - The region constitutes almost 61% of the international order book, data shows

Larsen & Toubro (L&T) Limited, an Indian multinational conglomerate, which has business interests in engineering, construction, manufacturing, technology and financial services, and is headquartered in Mumbai, is expanding in the Middle East.

SN Subrahmanyan, chief executive officer and managing director, L&T Limited, spoke exclusively to Khaleej Times.

He said L&T’s portfolio strategy targets well-balanced and geographically diversified businesses across India and international markets. The Middle East has been one of the key growth regions for the company, which constitutes almost 61 per cent of the international order book of Rs 68,773 (Dh33,642, 648.26) crore.

The Middle East accounted for 13 per cent of our total order book composition in financial year (FY) 21, the highest after domestic order book. The region also contributed 12 per cent to our total FY21 revenue. “We are very optimistic about our business plans in the Middle East region for the current year as well,” he said.

“The Middle East and North Africa (Mena) region has been one of the areas where we have already got a foothold in countries such as Egypt and Algeria. In the North Africa region, regional power pools and electrification needs provide us opportunities in Morocco, Algeria, Tunisia and Egypt,” he added.

Edited excerpts from the interview:

​​Why is the Middle East a crucial market for L&T?

L&T’s portfolio strategy targets well-balanced and geographically diversified businesses across India and international markets. The Middle East has been one of the key growth regions for the company, which constitutes almost 61 per cent of the international order book of Rs68,773 (Dh33,642, 648.26) crore.

The Middle East business unit that caters to the countries of the UAE, the Kingdom Saudi Arabia (KSA), Qatar, Oman, Kuwait and Bahrain have established a coveted position in the GCC region. With over four decades of mutual partnership, L&T has established a strong presence in Gulf Cooperation Council (GCC) countries, predominantly in the hydrocarbon, power transmission and water & effluent treatment sectors.

How is the region a key for your company as far as international businesses is concerned?

With the economic challenges and uncertainties induced by the pandemic now at bay, the Middle East market is resuming normalcy at a steadfast pace. We see green shoots emerging for new projects jobs that had to be put on the backburner return to the RFQ, RFP stage, along with some new biddings. L&T’s Hydrocarbon Engineering business has an overseas presence in the UAE (Sharjah), Saudi Arabia (Al Khobar), Kuwait and Oman (Muscat) as well as Algeria. International business is served through state-of-the-art modular fabrication facilities at Sohar in Oman and an integrated manufacturing facility at Jubail in Saudi Arabia.

L&T’s Power Transmission & Distribution (PT&D) business enjoys a significant share and a strong reputation in the Middle East, Africa and Asean markets. Most GCC countries are increasingly tapping into ‘green sources’ to bridge the power gap with smarter and more secure solutions to enhance reliability and effectively manage power distribution. L&T is well-placed on this front with strong associations with different entities in the Middle East.

Recently, our Water and Effluent Treatment business re-organized its business lines to reflect the changing trends and be more agile towards future opportunities. Our water infrastructure business is gradually gaining prominence, having executed some key infrastructure projects including the Jebel Ali Sewage Treatment Plant for the Dubai Municipality. The Water International vertical focuses on global markets and will continue to tap business opportunities in the Middle East.

What will the order book from the region look like next year?

The Middle East accounted for 13 per cent of our total order book composition in financial year (FY) 21, the highest after domestic order book. The region also contributed 12 per cent to our total FY21 revenue. We are very optimistic about our business plans in the Middle East region for the current year as well.

The renewable capacity addition plans in the Middle East, led by Saudi Arabia, are expected to receive a further boost with growing interests in green hydrogen. With the stabilisation of oil prices and the

Organisation of the Petroleum Exporting Countries (Opec) getting back to being good to each other, we will see some positive movement on some of those projects. This will lead to the Hydrocarbon prospect pipeline becoming more robust across onshore, offshore & construction jobs across domestic and international. We expect the Middle East to continue being a key growth driver for L&T’s businesses.

What are your expectations from Expo 2020 Dubai?

In synergy with Expo 2020 Dubai’s theme of ‘Connecting Minds, Creating the Future', we are looking at it as a robust platform to stimulate development, innovation and mutual growth. The India- UAE trade relationship now amounts to approximately $57 billion annually. As we move forward, L&T wants to add value to build a sustainable future for us and the Middle East, with technological transformation at the core. Our increased focus on our green portfolio, ESG, Hydrogen Economy and renewable energy are in sync with the elements that make up the vision of GCC countries. We continue to align our roadmap and actions with national and international frameworks related to Climate Leadership, Water Stewardship, Circular Economy, Green Supply Chain, and Biodiversity.

What are your expansion plans in the UAE, the GCC and the wider region in the Mena region?

In Last 10 years, we have built our presence across the GCC countries and primarily focused on three businesses i.e. Hydrocarbon Engineering (LTHE), Power Transmission and Distribution (PT&D) and Water & Effluent Treatment (WET). Specifically, in the UAE, we have executed and are executing projects across various locations such as Dubai, Abu Dhabi, Sharjah, Jebel Ali. We continue to pursue opportunities across the UAE depending on our competitive strengths in respective business segments.

GCC and the Middle East, in the past few years, has seen a slowdown in capital expenditure due to various factors. However, going forward, investments are expected to pick up again to create infrastructure which can cater to growing needs of the countries’ population. Also, as the oil and gas (O&G) exporting countries try to straddle the energy transition phase, we see investments to grow in areas of petrochemicals, renewables, hydrogen etc. We have identified significant opportunities emerging from these themes and will continue to pursue them in the coming years. Beside these, we will also target opportunities in transportation infrastructure (railway, MRTS), metals as well as digital offerings (Digital Substations solutions) and operations and maintenance (O&M) related prospects.

As part of our long-term strategy of balancing risk-return trade off, we continue to identify new geographies for business expansion. The Mena region has been one of the areas where we have already got a foothold in countries such as Egypt and Algeria. In the North Africa region, regional power pools and electrification needs provide us opportunities in Morocco, Algeria, Tunisia and Egypt. As countries of this region try to catch up with some of the fastest growing economies of the world, they will require investments to be made across different segments and we would target opportunities where we can contribute significantly. We continue to identify prospects across all countries in the Mena region, which pass our country risk filter, and aim to develop a significant portfolio in this region.

— joydeep@khaleejtimes.com