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L&T expects 30% rise in orders from hydrocarbon sector this fis

  • MUMBAI: Engineering conglomerate Larsen & Toubro expects a 30% growth in new orders from the hydrocarbon sector this fiscal, its chief executive officer and managing director told ET.

    The company hopes to bag Rs 10,000 crore of orders from upstream, mid and downstream companies and even fertiliser companies in 2012-13, as compared with over Rs 7,000 crore worth of orders it received from the sector in the previous fiscal.

    "We hope to have robust order inflow from hydrocarbon segment this year," K Venkataramanan said, adding, "The year opened with good order booking and we are pre-qualified for significant projects in India and abroad, which gives us reasonable comfort that we would bag at least Rs 10,000 crore of order by March."

    Although business from the hydrocarbon sector accounts for only 10% of the Rs 71,000-crore conglomerate's business, order wins from the segment will be crucial for the company as the other sectors it does business with, such as power and infrastructure, continue to see muted capital expenditure and delay in ordering.

    L&T has guided that its order inflow in 2012-13 will be 15-20% higher than the Rs 70,574 crore reported a year ago. "The past two years have been very weak in the hydrocarbon sector, but we see a good pipeline of orders from ONGC. Also, the steps that we have taken towards expanding our business in the Middle East would yield result this year," Venkataramanan said.

    Venkataramanan, who also heads the group's hydrocarbon business vertical, said L&T is working on forming alliances abroad to be able to participate in projects worth $3 billion or more - a segment dominated by Japanese and Korean engineering companies. The company, so far, has only targeted projects worth up to $1.5 billion in the Middle East.

    Analysts said that while some of L&T's pending orders may fructify this year, the company may not find it easy to achieve its targets. "Expectations for the hydrocarbon sector are running high, so misses are most likely here," said brokerage CLSA in a report last week.

    L&T missed its annual guidance for fiscal 2011-12. "Order inflow looks to be in a tight situation. We still maintain a flat year-on-year order intake view in the absence of any signs of industrial capex revival, bleak hydrocarbon scenario and looming crisis in the power generation sector in India," brokerage Prabhudas Lilladher said in a report.

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