L&T Targets 30% Growth in New Hydrocarbon Orders

Orders from this segment are crucial as other verticals see muted growth 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 . 10,000 crore of orders from upstream, mid- and downstream companies and even fertiliser companies in 2012-13, compared with orders worth over . 7,000 crore 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 . 10,000 crore of order by March."  Although business from the hydrocarbon sector accounts for only 10% of the . 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 . 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 targetted projects worth up to $1.5 billion in the Middle East.  Analysts said 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 firm CLSA in a report last week.