Infrastructure development is imperative to revive economic activity.

- SN Subrahmanyan

CEO & Managing Director, Larsen & Toubro

What are the key continuing challenges which you foresee impacting the economy as a whole, and the Infrastructure Sector post easing out of lockdown in stages?

The Covid-19 pandemic was an unprecedented black swan event that unfolded throughout the world. Countries had to initiate strict measures to protect their populace as much as possible from falling in the grips of this deadly virus. But the economy lost two whole productive months due to these essential measures and now slowly coming back to normalcy.

For a project-based organization like ours, the lockdown meant that all physical activity ground to a complete halt. However, activities like planning, designing, and engineering continued uninterrupted and with our sites and facilities kept in readiness, we were able to re-start operations as soon as the restrictions were relaxed.

As the country unlocks more, means of transport open, supply chains resume and labour returns, operations at about 90% of our project sites and all our manufacturing facilities have resumed and are gradually moving into high gear. We remain positive.

Are there any green shoots visible after the announcement of the stimulus packages / and RBI's rate cuts on the infrastructure sector?

Infrastructure development is imperative to revive economic activity, create employment and infuse more liquidity into the system. We see many green shoots of prospective orders in the infrastructure segment. The demand conditions being subdued resulted in lower procurement costs for certain class of materials till date.

Has the unlocking had a positive impact on your company's order book?

We recently bagged the biggest EPC contract awarded in the country to date. It is the first of its kind project with a mandate to construct the 237.1 km stretch MAHSR - C4 package which is part of the Mumbai Ahmedabad high-speed rail project. Our Company has an order book of close to 3 lakh crores at the end of September quarter out of which 73% comes from the infrastructure sector.

We see a lot of prospects in heavy civil infrastructure like metro projects, high speed rail corridors, ports and harbours, hydel projects etc. Projects funded by multilateral agencies such as World Bank, JICA, Asian Development Bank, etc. should start moving faster. We are therefore optimistic that sectors like hospitals, power transmission and distribution, water, railways, roads, renewable energy, and Defence will start showing greater traction.

What further measures / reforms should be undertaken by the states / central government to facilitate a healthy growth of the economy and rebooting the infrastructure sector?

It is well known that infrastructure projects have a multiplier effect on employment and income. Prioritizing spending on these projects along with resolution of some issues related to land acquisition, PPP projects and labour laws will help kickstart the economy. The government's Make in India and Aatmanirbhar Bharat initiative, especially in defence sector are key steps taken in the right direction to make India self-reliant. Going forward, increased budget allocation for defence modernization will be of immense strategic importance to this sector.

Post gradual opening-up, how do you see the impact on the investment scenario in infrastructure sector?

The government has a visionary target of making India a $5 trillion economy by 2024-25. In order to achieve this, the country needs to fire up all three engines of growth - consumption, private investment and government spending. Currently, we have a huge infrastructure deficit for a growing economy. Focusing public spending towards sectors such as roads, railways, infrastructure, healthcare and educational facilities will lead to job creation and in turn help revive the economy. Considering the sharp decline in GDP in the first quarter, I expect the government will quickly step up the pace of spending in the required areas.

What is the impact on job creation / loss from your company's perspective post implementation of stimulus package?

Our company has done one of the largest labour mobilizations in the recent times. During the first few unlock phases of the pandemic the labour deployed at our sites had reached to as low as 70,000, while the situation is now back to 2,50,000 laborers. So nearly 1,80,000 laborers have been mobilized in the last couple of months by us.

Post pandemic era how do you envision the transformation of design / construction processes, marketing and supply chain management, especially with the advent of disruptive technologies? 

Over the last few years L&T has deliberately and slowly enhanced its technology footprint and is charting a course in the recent years that will see its technology portfolio increase its contribution vis a vis its traditional businesses. In 2014-15 the world was seeing a tectonic shift with digital technologies. These emerging technologies were creating new processes, new business models and entirely new businesses. Digitalization and digital transformation was sweeping the business world. L&T was seeing and experiencing this first-hand from its clients of the IT service companies. L&T saw the opportunity of digital as twofold. First, to digitally transform its own operations and use these new technologies to get better at what it was already doing well. Second, to look at digital as a new business opportunity that could shape its future portfolio.  L&T started doing both and it acted swiftly with determination, speed, and scale.

How have you been able to realign the business creating value through different strategies during this pandemic?

Across the world, companies and businesses are grappling with unprecedented situations and unexpected developments. Global GDP is set to contract and ours is showing definite contraction. In such a scenario, it is very important to stick to the basics, stick to the knitting, as I say, and continue to do well what we do best.

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