I HAVE THE CONFIDENCE THAT WE DO HAVE THE RIGHT CALIBRE OF PEOPLE TO LEAD OUR BUSINESSES IN THESE TESTING TIMES. S.N. Subrahmanyan, CEO & MD - Larsen & Toubro From the Desk of SNS organization, have come to be known for. Tough times ahead Calling for tough people WORKING Undoubtedly, a project of tremendous Uncertainty both globally and domestically We broke the format of our traditional New scale, we achieved remarkable speed in is causing uneasiness in all quarters. BREXIT Year Programme this year by organizing a CAPItaL IS execution by completing the construction issues in Europe, the new protectionist series of Town Halls for each of our ICs, in just 33 months. This could not have trade policies of the US, a decelerating SBGs and the Smart World business. The BURNING MONEY; been possible without the contribution Chinese economy and political instability move was a good one and it was very from all quarters which reflects a huge in the Middle East are reasons for worry. encouraging to see the maturity of the BUYING ASSETS triumph of teamwork. People from On the home front, the approaching interaction at these events. The level of IS BUILDING FOR various divisions and functions from general elections is keeping everyone presentations many by young leaders, the across the organization came together guessing as to which direction the wind is kind of questions posed and the quality of THE FUTURE AND to unitedly build a monument, that going to blow and with both private and responses were of a uniformly high order fittingly, celebrates the spirit of unity. public investments at an all time low, the giving me the confidence that we do have THEREFORE IT IS The project severely tested our ability to scenario is not very encouraging. Further, the right calibre of people to lead our deal with and deliver to the demands of with our own industry going through businesses in these testing times. VERY IMPORtant both international and local consultants the rigours, things are going to be uphill Internally too, we have challenges as some FOR US TO BUILD and stakeholders, meet all the varied going forward. Against this background, of our businesses have already ‘peaked’ requirements of an extremely demanding we still have close to Rs. 40,000 crores and there is not much more we can Fast AND COLLECT client and yet achieve complete synergy in of order booking to do! It will not be an extract from them while, in other cases, our delivery. We managed it all remarkably exaggeration that we really have our work business models have changed requiring EQUALLY Fast. well for SoU to be one of our best success cut out for us! us to change accordingly to remain stories of recent times. relevant. The EPC space also seems to be shrinking and hence it is imperative that Dear Colleagues, we find success in other areas. The need 2018 was by no means an easy year of the hour is for us to be more agile, to and with the kind of headwinds that we be able to sense changes and be prepared foresee, 2019 may not be much better to react to them, quickly and decisively. of delivering both phases ahead of time. Middle East are all huge opportunities. either but then, we have proven time and We have improved substantially from our Build fast. Collect faster. Our strategy going forward will be to again that when the going gets tough, the performance in 2017 but there is still At the same time, we must be ever go for fewer but bigger projects in tough get going so am quietly confident THE LEVEL OF PRESEntatIONS MANY some way to go. Every project has to be mindful of our profitability. Our Gross which players of our size and stature about our future. Last year, L&T entered delivered on time for us to maintain our Working Capital as a percentage of sales can make a difference. Success is for its 80th glorious year of doing what we BY YOUNG LEADERS, THE KIND profitability. is a cause for concern with money, that is those who are willing to aggressively go do best of ‘Making things that Make India after these opportunities. With the right OF QUESTIONS POSED AND THE rightfully ours, stuck with our clients for Aggression will bring success Proud’ and it is an achievement that every kind of passion, drive, dedication and almost 294 days. In other words, nearly We bagged some extremely good projects one of us can be immensely proud of commitment mixed with aggression, QUALITY OF RESPONSES WERE OF 50% of our money is outside which in last year like the Mumbai Trans Harbour though it also places a huge responsibility success is guaranteed. turn means that we are running our Link, packages for the Mumbai-Nagpur on all of us not only to continue the good A UNIFORMLY HIGH ORDER GIVING client’s projects with our money and each Expressway, the Oman Botanical Gardens, That is the aggression I seek from each work but keep improving and set new one of us must take this up as a mission to Dhakka Metro, Nagaur water project, one of you to make 2019 a wonderfully benchmarks. ME THE CONFIDENCE THat WE DO change this situation. Working capital is Mumbai Coastal Road, expansion of fulfilling and successful New Year! A benchmark par excellence HAVE THE RIGHT CALIBRE OF PEOPLE burning money; buying assets is building the Hyderabad and Bengaluru airports, Warm regards, Speaking of benchmarks, perhaps our for the future and therefore it is very projects for APTIDCO, to name a few. most significant achievement of 2018 was TO LEAD OUR BUSINESSES IN THESE important for us to Build Fast and Collect S.N. Subrahmanyan There are still several huge projects out the delivery of the Statue of Unity project equally Fast. CEO & MD there for the taking: Hyperloop, High on time as per the request of our Hon’ble TESTING TIMES. Having said that, it was heartening to note Speed-Rail, Neom City in Saudi Arabia, Larsen & Toubro Prime Minister. For me, this project, that that a dozen of our projects was delivered the resurgence of the airports sector, has now been universally acknowledged last year on time to our customers with P75i, refineries & process plants, river as an engineering marvel of modern times, Lucknow Metro achieving the distinction inter-linking, Bharatmala and Solar in the epitomized several qualities that we, as an 2 ECC News, July - December 2018 ECC News, July - December 2018 3 NEW YEAR PROGRAMME - 2019 A very relevant part of our New Year Programme 2019 was a panel discussion featuring the L&T Construction leadership. Several extremely pertinent and hard-hitting questions received from employees from across the organization were thrown at them by the moderator, A L Sekar, Senior VP – Special Projects and these were their responses. On EPC jobs and HAM & BOT projects The roads sector, in particular, has been impacted with 70% of the jobs being awarded through HAM while we are not comfortable to bid for BOT projects because they are largely owner-driven. Then there are bidders who do not have a construction arm of their own who are approaching us. We have also decided that we will not bid for EPC jobs of less that Rs. 1,000 Crores so that S N SUBRAHMANYAN, reduces our market by 50%. In the remaining 50%, our strike rate is about CEO & MD, Larsen & Toubro On opportunities for growth 10-15%. We see opportunities in the expressway projects that have stricter qualifying norms and some of our recent wins have been in that space like It is never a question of age or batch; anyone who is a performer the Mumbai-Nagpur, Dwarka and Vadodara-Mumbai Expressways. can come up in the organization and an example is my own career at L&T Construction. Given an opportunity, one should be able to take it and come up. There are lots of opportunities around and if you are keen to take them, then sky is the limit. D K SEN, In fact, that is the only way we can develop future leaders. Age Whole Time Director & Senior Executive is not the criteria; it is only performance. Re-orient your minds, Vice President (Infrastructure) seek out massive assignments and prove yourselves. On commoditization of the roads business From the TI perspective, the roads sector can be broadly divided into domestic and international and within roads, there are 3-4 strategic businesses like the elevated corridors and smart cities that are not yet commoditized. Smart Cities by the very nature of their complex requirements and increased scope offer growth potential not only for TI but certain other ICs as well. In elevated corridors, we do have an edge because players with the credentials of having constructed continuous elevated corridors of 5 km or more are very few in number. We were initially not successful with our system of milestone-based billing but with improved internal systems, especially digitalization, we are now in a position to be more cost effective, productive, nimble-footed and, at the same time, reduce working capital. On the adoption of On opportunities for women digitalization Much of our business is commoditized We have been employees reinventing and keeping ourselves ahead of competition: for It is true that construction is a male-dominated industry but we eg. In the hospital sector, we started with column, beam & have been making sincere and earnest attempts to give ladies slab, then complete hospitals to turnkey hospitals to design more and more opportunities to grow and perform.