In the preceding month, Larsen & Toubro (L&T), a prominent Indian engineering and infrastructure giant, organised a multi-city walk-in drive in India through its hydrocarbon division. The purpose was to recruit personnel for projects spanning three Indian states - Gujarat, Maharashtra, and Tamil Nadu - as well as an overseas location in the Kingdom of Saudi Arabia. This initiative underscored the growing significance of West Asia for the company.

As of June, L&T boasted an impressive order book of Rs 4.12 trillion. Notably, about 25% of this, amounting to Rs 1 trillion, originated from West Asia. This substantial share was primarily attributed to a construction boom in Saudi Arabia, a trend observed by the company's executives and industry experts. To put this in perspective, West Asia accounted for merely 11.4% of L&T?s order book, valued at Rs 2.94 trillion, at the beginning of FY20.

By 2023, L&T had emerged as one of the leading Engineering, Procurement, and Construction (EPC) contractors in West Asia. The company?s success in the region was credited to a localised approach, involving the establishment of local offices, strategic placements of senior managers, and alliances with regional business groups. Over the past three years, L&T had deployed more than 10,000 employees in West Asia for various projects, indicating the scale of its operations in the region.

To meet its funding requirements, L&T had explored non-fund-based (NFB) limits in these markets. Anup Sahay, Executive Vice President (Corporate Strategy and Special Initiatives) at L&T, emphasised the importance of this localised strategy. He highlighted initiatives such as proximity to clients through local offices, understanding market and client expectations through senior manager placements, and forging alliances with local business entities.

Despite its successes, L&T faced challenges, particularly concerning manpower. Issues related to work visas and deployment timelines were acknowledged, with some countries imposing employment caps based on nationality, hindering efforts to establish a diverse workforce. Additionally, the availability of skilled labor posed a challenge for executing L&T?s extensive order book. To counter this, the company embraced increased mechanisation, automation, and offsite production. Furthermore, specialised construction and installation equipment were developed in-house.

A 2023 Deloitte report on the Gulf Cooperation Council (GCC) construction market highlighted that contracts worth approximately $94 billion were awarded in 2022. This marked a decrease of over $20 billion compared to the previous year. However, Saudi Arabia stood out, with contracts nearing $54 billion, surpassing the combined figures of other GCC states. L&T strategically positioned itself in this promising segment, securing orders across various sectors such as metros, transmission lines, water resources, gold ore processing, oil and gas, and renewable energy, primarily from Saudi Arabia.

Despite the challenges, L&T's ambitions in the region remained strong. An undisclosed but substantial $3.9 billion package for Saudi Aramco?s expansion at the Jafurah unconventional gas production project in Saudi Arabia was reportedly in L&T?s pipeline. Additionally, the company expressed keen interest in railway and new port development projects associated with the India-Middle East-Europe Corridor, recently unveiled at the G20 Summit. However, awaiting clarity on the project scope and scale, L&T continued its robust pursuit of opportunities in the region.

Source: Business Standard