L&T's electricals business to lap up global demand

Last Updated: Wed, Jul 18, 2012 19:10 hrs

Larsen & Toubro (L&T)’s electrical and automation business is expected to grow 15 per cent this year, contributing as much as Rs 4,600 crore in revenue. The business segment has seen two acquisitions, along with expansion of capacity, this year.

“We expect 26 per cent of this Rs 4,600 crore to come from international markets,” said S C Bhargava, senior vice-president and head of L&T’s electrical and automation business.

He says there is a lot of demand from Gulf Cooperation Council countries like the United Arab Emirates (UAE), Saudi Arabia, Qatar, Bahrain, and Kuwait.

“There are a lot of buildings coming up in the UAE and Qatar,” he said. Qatar, which is preparing to host the FIFA World Cup in 2022, is spending on new construction, while Saudi Arabia is investing in oil and gas terminals and electricals.

Recently, L&T had expanded its portfolio in the buildings switchgear segment, in which it sees substantial demand. Its subsidiary Tamco Switchgear acquired Malaysian company Henikwon, which manufactures low- and medium-voltage busduct systems, an efficient and cost-effective way of providing motive power.

“It is a strategic fit. We already have switches and circuit breakers. Busduct systems complete the product mix,” said Bhargava.

Adding new products is important for this business, as every year, 30-31 per cent of sales are accounted for by products less than five years old.

“To maintain these sales at the same rate, we have to keep up new product intensity,” he said.

The buildings electricals segment is a focus area for the company, as a growing number of residential and commercial complexes opt for automation. Also, this segment is recording faster growth compared to the traditional industrial electricals segment, says Bhargava.

In April, L&T had acquired UK-based Thalest group, which offers various naval and marine mercantile solutions. Therefore, the company would now vie for more marine electrical and automation businesses. Since Thalest would provide control systems technology for commercial ships, as well as warships, L&T claims this would enable the company to access new markets.

Recently, the company’s Vadodara facility was expanded to house modules for the assembly line for circuit breakers, along with shops for press working, moulding and tooling. This would enhance productivity by 2.5 times, and cater to the expected rise in demand. “We see three areas of growth from electrical requirements — the agricultural sector, building electricals and international markets,” said Bhargava.

Last year, after domestic orders fell, the company planned to focus on business abroad. In 2011-12, the company’s order inflows fell 12 per cent.

For the current financial year, the company has forecast 15-20 per cent growth in order inflows, backed by increased focus on international markets. Chairman A M Naik had said the company would seek access to more markets, as well as more business from markets in which it was already present.

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