L&T to enhance business in Africa, Southeast Asia to make up for losses in West Asia

L&T to enhance business in Africa, Southeast Asia to make up for losses in West Asia

Aug 29, 2016: Larsen & Toubro is planning to scale up its business in Africa and Southeast Asia in order to make up for the slowdown in West Asia, say reports. The slowdown comes in the wake of the low crude oil prices that are continuing to weigh on investment plans of oil-rich nations.

L&T’s overseas orders currently account for a third of its order inflow, up from 10-12 per cent a few years ago.

Aiming to lessen the impact of the domestic market, the $16-billion construction sector giant had diversified into West Asia. But it is facing challenges, as the region has been incurring huge losses on hydrocarbon projects while the fall in crude oil prices has led to drying of the order pipeline.

According to media reports, L&T would explore new markets in Tanzania, Kenya, Ethiopia, Uganda, Mozambique and Algeria in Africa and Malaysia, Vietnam, Indonesia in Southeast Asia.

The Mumbai based conglomerate is currently doing electrical jobs in Southeast Asia but is on the lookout for local partners to take up infrastructure jobs.

Although the order pipeline in West Asia remains muted, the company has almost completed legacy orders in which it was incurring losses due to inability to pass on cost escalation and other issues, thus improving the profitability.

The company is reportedly expecting a profit of around Rs 150 crore in the current financial year and Rs 400 crore in 2017-18.

In July, a L&T’s Hydrocarbon-led consortium bagged an order worth $1.6 billion (Rs 10,757.2 crore) from oil firm Saudi Aramco and the company has exuded confidence in getting more orders in Saudi Arabia.

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