Our focus on internationalisation has translated into success in the overseas markets

14 Jul 2014 CW Team

Says SN Subrahmanyan, Whole-time Director & Senior EVP (Construction & Infrastructure), Larsen & Toubro Ltd. Despite diverse difficulties in the last two years, L&T proved its mettle by delivering consistent financial performance. Read on for insights into this industry bellwether's growth mantras during the challenging times of the recent past as well as its preparations for the growth phase on the horizon. Excerpts of his conversation with CW:

How were you able to grow the topline and bottomline during the challenging year of 2013-14?
In a tough business scenario, the primary growth mantras we followed that yielded good results were re-structuring the organisation, widening the spectrum and scope of projects, focusing our efforts in new geographies, creating a trained labour force, maintaining a robust risk management process, successfully embracing new technologies, improving the supply chain and thereby enhancing operational efficiency.

For greater focus on core competencies, to become more competitive and aligned to customer expectations and requirements, the organisation was divided into various specific business verticals. Over the last two years, with complete empowerment, each vertical has grown into an independent business with execution and delivery tailored for its particular line of operation. This has resulted in superior project management, enhanced quality and safety, cost optimisation and, most important, timely delivery.

While hitherto, our involvement in the rail sector had been confined to general electrification projects, the project to develop India's first dedicated freight corridor, which is the largest order handed out by the Indian Railways, has been a significant move towards portfolio enhancement. In the realm of renewable energy, which is an entirely new area for us, the work we have done in constructing some of the largest solar plants in the country has been note-worthy. We have to our credit Asia's largest CSP Plant (125 MW), India's largest rooftop plant (7.5 MW) in Punjab and India's largest tracking plant of 10 MW in Gujarat.

With the domestic market not throwing up sufficiently good opportunities, we trained our sights on the Middle East with considerable success. Our Power Transmission and Distribution business vertical has made significant inroads into the Gulf markets by bagging many major orders. For our Transportation Infrastructure Business vertical, the way has been even better with several new projects in the bag including the Batinah & Bid-Bid Sur Highways in Oman, Al-Wakrah Highway at Qatar and the Maffraq road project in the UAE.

A robust organisational structure has been created in the Middle East where we have positioned the Heads of Heavy Civil and Transportation Infrastructure verticals for better control and operational ease. We have relocated experts and specialists from these two verticals to cover every aspect of operation - from contracts to project execution; from design to supply chain management, from HR to site administration. This move has already started to bear fruit with the bagging of two prestigious Metro projects in Riyadh and Doha.

The success of projects depends heavily on the quality of the work force we are able to mobilise. To create a well-trained work force, we have set up eight Construction Skills Training Institutes (CSTIs) across the country. We even have dedicated HR for labour and close to 4,000 unemployed youths from villages have been trained and converted into skilled labourers annually, who in turn contribute by improving the quality and speed of construction at our project sites.

Another growth mantra has been to put in place a robust risk management process to cover every stage of the project right from pre-bid to execution. This has not only helped us to pick and choose the projects that we want to do but has also enabled us to complete and commission projects within stipulated deadlines.

A contractor is only as good as his partners and hence a good supply chain is crucial for success. We have developed a very wide and strong chain of suppliers both in India and overseas. The adoption of practices like e-procurement has ensured better pricing and greater process efficiency.

Finally, to remain contemporary, it is imperative to embrace new and evolving technologies and put them to work to our benefit. Our R&D Centre and Centre for Excellence and Futuristic Development works towards developing sustainable and carbon neutral built spaces. 'Srishti' is a 3D studio, the first of its kind in the Indian construction industry, where ideas are created, synergised and designs culminate in virtual reality.

If you had to attribute one factor that helped you the most in growing your organisation during this year, it would be...?
For L&T Construction, growth drivers have been many. The re-structuring of the organisation was crucial in introducing greater focus and vigour to our working. This has also resulted in greater geographical spread and depth of business as these business verticals have gone out to aggressively seek and tap opportunities. Our focus on 'internationalisation' has translated into success in the overseas markets which was part of a concerted strategy and not dictated by falling domestic demand.

Many companies suffered during this year. If you were to attribute one single factor or decision that you avoided, which helped you or saved you from getting into trouble, it would be...?
Relationships are the key in today's business scenario and the ones we have forged with our customers, both existing and prospective, have held us in very good stead. Further, we have developed partnerships with experts in relevant fields to offer complete end-to-end solutions to our customers.

Given the likely improvement in economic circumstances, how do you plan to prepare your organisation for forthcoming growth in 2014-15?
Going forward, there is already a ground swell of positive sentiment which augurs well for the country and industry but, having said that, success in the immediate future will depend on being able to attract and retain better talent, play to our strength which is 'Design & Build' and turnkey jobs with technology inputs, increase focus on mechanisation to reduce dependency on scarce skilled labour and seek more success in partnerships.

People have always been our prime movers and will remain to be our prime assets going forward. While construction is not seen in the same light as career destinations as some of the other more hyped sectors, the challenge will be to attract and retain the right kind of talent from across the globe to enable us to take on more projects of size, scale and scope.

'Design & Build' has been our specialisation and we will continue to take on more projects of that kind. We offer single-point responsibility and with an enviable track record of delivering mega projects within stringent timelines we are well positioned to face the future.

While we are making significant strides in creating skilled labour force, the stress will be on increasing mechanisation through the use of self-climbing formwork systems for tall structures , precast technology for housing, micro-tunneling for sewer laying, automatic track laying machine for railway tracks, modular panel-wise dispatch & erection of transmission line towers and the like. The mechanisation process is adopted at every site through dedicated construction methods and planning cells and would be a beacon to address the issue of labour shortage.

In a changing business environment, we will be increasingly faced with the prospect of working through joint ventures or consortiums especially in the overseas scenario. While there is the challenge of understanding and synthesising with the thinking and working of foreign partners, the partnership mode has the advantages of risk optimisation and being able to leverage shared expertise as in the case of some of our big ticket projects like the Riyadh and Doha metros.

Says SN Subrahmanyan, Whole-time Director & Senior EVP (Construction & Infrastructure), Larsen & Toubro Ltd. Despite diverse difficulties in the last two years, L&T proved its mettle by delivering consistent financial performance. Read on for insights into this industry bellwether's growth mantras during the challenging times of the recent past as well as its preparations for the growth phase on the horizon. Excerpts of his conversation with CW:How were you able to grow the topline and bottomline during the challenging year of 2013-14? In a tough business scenario, the primary growth mantras we followed that yielded good results were re-structuring the organisation, widening the spectrum and scope of projects, focusing our efforts in new geographies, creating a trained labour force, maintaining a robust risk management process, successfully embracing new technologies, improving the supply chain and thereby enhancing operational efficiency. For greater focus on core competencies, to become more competitive and aligned to customer expectations and requirements, the organisation was divided into various specific business verticals. Over the last two years, with complete empowerment, each vertical has grown into an independent business with execution and delivery tailored for its particular line of operation. This has resulted in superior project management, enhanced quality and safety, cost optimisation and, most important, timely delivery. While hitherto, our involvement in the rail sector had been confined to general electrification projects, the project to develop India's first dedicated freight corridor, which is the largest order handed out by the Indian Railways, has been a significant move towards portfolio enhancement. In the realm of renewable energy, which is an entirely new area for us, the work we have done in constructing some of the largest solar plants in the country has been note-worthy. We have to our credit Asia's largest CSP Plant (125 MW), India's largest rooftop plant (7.5 MW) in Punjab and India's largest tracking plant of 10 MW in Gujarat. With the domestic market not throwing up sufficiently good opportunities, we trained our sights on the Middle East with considerable success. Our Power Transmission and Distribution business vertical has made significant inroads into the Gulf markets by bagging many major orders. For our Transportation Infrastructure Business vertical, the way has been even better with several new projects in the bag including the Batinah & Bid-Bid Sur Highways in Oman, Al-Wakrah Highway at Qatar and the Maffraq road project in the UAE. A robust organisational structure has been created in the Middle East where we have positioned the Heads of Heavy Civil and Transportation Infrastructure verticals for better control and operational ease. We have relocated experts and specialists from these two verticals to cover every aspect of operation - from contracts to project execution; from design to supply chain management, from HR to site administration. This move has already started to bear fruit with the bagging of two prestigious Metro projects in Riyadh and Doha. The success of projects depends heavily on the quality of the work force we are able to mobilise. To create a well-trained work force, we have set up eight Construction Skills Training Institutes (CSTIs) across the country. We even have dedicated HR for labour and close to 4,000 unemployed youths from villages have been trained and converted into skilled labourers annually, who in turn contribute by improving the quality and speed of construction at our project sites. Another growth mantra has been to put in place a robust risk management process to cover every stage of the project right from pre-bid to execution. This has not only helped us to pick and choose the projects that we want to do but has also enabled us to complete and commission projects within stipulated deadlines. A contractor is only as good as his partners and hence a good supply chain is crucial for success. We have developed a very wide and strong chain of suppliers both in India and overseas. The adoption of practices like e-procurement has ensured better pricing and greater process efficiency. Finally, to remain contemporary, it is imperative to embrace new and evolving technologies and put them to work to our benefit. Our R&D Centre and Centre for Excellence and Futuristic Development works towards developing sustainable and carbon neutral built spaces. 'Srishti' is a 3D studio, the first of its kind in the Indian construction industry, where ideas are created, synergised and designs culminate in virtual reality. If you had to attribute one factor that helped you the most in growing your organisation during this year, it would be...? For L&T Construction, growth drivers have been many. The re-structuring of the organisation was crucial in introducing greater focus and vigour to our working. This has also resulted in greater geographical spread and depth of business as these business verticals have gone out to aggressively seek and tap opportunities. Our focus on 'internationalisation' has translated into success in the overseas markets which was part of a concerted strategy and not dictated by falling domestic demand. Many companies suffered during this year. If you were to attribute one single factor or decision that you avoided, which helped you or saved you from getting into trouble, it would be...? Relationships are the key in today's business scenario and the ones we have forged with our customers, both existing and prospective, have held us in very good stead. Further, we have developed partnerships with experts in relevant fields to offer complete end-to-end solutions to our customers. Given the likely improvement in economic circumstances, how do you plan to prepare your organisation for forthcoming growth in 2014-15? Going forward, there is already a ground swell of positive sentiment which augurs well for the country and industry but, having said that, success in the immediate future will depend on being able to attract and retain better talent, play to our strength which is 'Design & Build' and turnkey jobs with technology inputs, increase focus on mechanisation to reduce dependency on scarce skilled labour and seek more success in partnerships. People have always been our prime movers and will remain to be our prime assets going forward. While construction is not seen in the same light as career destinations as some of the other more hyped sectors, the challenge will be to attract and retain the right kind of talent from across the globe to enable us to take on more projects of size, scale and scope. 'Design & Build' has been our specialisation and we will continue to take on more projects of that kind. We offer single-point responsibility and with an enviable track record of delivering mega projects within stringent timelines we are well positioned to face the future. While we are making significant strides in creating skilled labour force, the stress will be on increasing mechanisation through the use of self-climbing formwork systems for tall structures , precast technology for housing, micro-tunneling for sewer laying, automatic track laying machine for railway tracks, modular panel-wise dispatch & erection of transmission line towers and the like. The mechanisation process is adopted at every site through dedicated construction methods and planning cells and would be a beacon to address the issue of labour shortage. In a changing business environment, we will be increasingly faced with the prospect of working through joint ventures or consortiums especially in the overseas scenario. While there is the challenge of understanding and synthesising with the thinking and working of foreign partners, the partnership mode has the advantages of risk optimisation and being able to leverage shared expertise as in the case of some of our big ticket projects like the Riyadh and Doha metros.