L&T bets on big submarine contracts to sustain growth

Engineering and construction major Larsen and Toubro (L&T) is betting on big orders from the defence segment in the second half of this fiscal to boost its order book and sustain growth momentum.

L&T’s MD and CEO S.N. Subrahmanyan told The Hindu, “In defence shipbuilding, after a long time, the government has come out with 9-10 requests for quotation (RFQs). If we are even lucky in getting one or two, our shipbuilding yard will be occupied. I am optimistic and it should happen in the next 3-4 months.”

In June, the Defence Ministry issued four shipbuilding requests for proposal (RFP) amounting to Rs 15,000 crore for the acquisition of various ships and craft for the Navy and Coast Guard.

The government is considering a mega Rs 60,000 crore ‘Make in India’ project named P75I for the construction of six conventional submarines with advanced abilities to stay underwater for extended periods. L&T is keen to participate in the project and has opposed the idea that submarine projects should be given to public sector shipbuilders on a nomination basis.

Mr. Subrahmanyan said, “Submarine is a strategic issue. The government is talking about Indian make of P74I; they [government] will have to decide the foreign partner first for the technology and then it will be made in India with local partners.”

‘Policy inaction’ ::

According to L&T, the sector continues to be plagued with policy inaction on allowing the private sector to participate in defence manufacturing and fabrication.

With a Rs 573-crore in orders during Q2, L&T’s order book in the defence arena stood at Rs 10,603 crore as on September 30, 2019, with the international order book constituting 16% of the total.

“The execution of tracked artillery gun order continues to drive revenue growth and margins in the segment. The current policy continues to inhibit private sector participation,” said L&T Group CFO R. Shankar Raman.

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