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MUMBAI, April 10

THE Engineering and Construction (E&C) division of Larsen & Toubro has entered the current financial year with an order book position of Rs 9,400 crore, which is 25 per cent higher than its position in April 2002.

The division's efforts at augmenting international business have borne fruit as well, with export orders accounting for Rs 2,120 crore, increasing 125 per cent over the year, according to Mr K. Venkatramanan, Member of the L&T board and President (Operations), E&C division.

Speaking to newspersons, he said: "We wanted exports to account for 30 per cent of the E&C business by 2006, and we are already very close to it.''

The order book for L&T as a whole has grown by about 20 per cent, to Rs 13,000 crore, according to a company statement.

L&T is trying to build its E&C brand internationally and has taken a leadership position in brand building exercises undertaken by India Trade, Confederation of Indian Industry (CII) and Chemtech, Mr Venkatramanan said.

Although margins from international contracts are lower than from domestic contracts by a few percentage points, the company is getting to be known more for its quality work than for its price advantage, he added.

The division, which has already bagged contracts in the Gulf countries, would also be looking at projects in African countries and elsewhere funded by multinational companies, and projects in other developing countries funded by the World Bank or other multilateral agencies.

"We are looking at China as well, where the heavy engineering division has already made an entry,'' Mr Venkatramanan said.

"We are doing cautious homework on Iran and would definitely look at Iraq when it gets into shape, we are already present in Kuwait and this gives us a gateway to Iraq.''

The current situation in Iraq has not affected L&T's ongoing projects in Qatar, Dubai, UAE and Kuwait, he said.

In Europe and America, the division currently takes up contracts only on FOB basis.

On the domestic front, the scope for L&T lies in gas-based power projects, the road sector, and the hydrocarbon sector where refineries would be looking towards euro-friendly motor upgradation, he said.

The entry of Petronet could lead to the revival of Kribhco, which would definitely hold possibilities for L&T. There are also opportunities in the non-ferrous metals industry, in water supply systems and effluent treatment.

The E&C division is also looking at deepwater oil rigs; earlier, it was only looking at platforms construction.

L&T will bid for the state-owned Engineers India Ltd, bids for which are expected during the current fiscal, Mr Venkatramanan said.

The heavy engineering section, which is part of the E&C division, has recorded a jump in exports from Rs 45 crore four years ago to Rs 200 crore in 2002-03, according to Mr P.M. Mehta, Senior Vice-President, who heads the division.

Domestic nuclear, defence and aerospace contracts worked out to 25 to 30 per cent of this division's business, he added.

The company has obtained letters of intent for four different categories of items from the Government.

The E&C division has already advanced to the L&T board "its methodology'' for the spin-off of the company's cement division "so that the balance sheet and the net worth would be maintained at a comfort level'', since the balance sheet is a very important criterion in the award of international contracts, Mr Venkatramanan said.

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