Home Business L&T executives describe Rs 35,000 crore Saudi Aramco order as their largest ever

L&T executives describe Rs 35,000 crore Saudi Aramco order as their largest ever

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Senior executives from Larsen & Toubro (L&T), a leading engineering conglomerate, clarified Tuesday on reports about a new Saudi Aramco order, stating it is part of their existing order book.

In a landmark development for India’s engineering giant Larsen & Toubro (L&T), the company has secured a staggering order worth Rs. 35,000 crore from Saudi Aramco, the world’s largest oil exporter. This monumental contract marks a significant stride not only for L&T but also for India’s prowess in delivering cutting-edge infrastructure solutions on a global scale.

Breaking Groundof L&T: The Rs. 35,000 Crore Deal

The deal, finalized between L&T and Saudi Aramco, encompasses a broad spectrum of projects aimed at enhancing Saudi Aramco’s refining and petrochemical facilities. Under the terms of the agreement, L&T will undertake crucial engineering, procurement, and construction (EPC) responsibilities. This includes the construction of various units and associated infrastructure within Saudi Aramco’s expansive operations.

L&T’s share price closed at Rs 3,624.25 on Tuesday, up 2.74 per cent, driven by the assumption of a new order win. Sarma clarified the order is part of L&T’s outstanding order book of Rs 4.75 trillion as of March this year. Sarma remains optimistic about new orders from West Asia. “We are pursuing several large projects in both upstream and downstream. Our prospect pipeline looks promising,” he said, adding that while FY24 saw “steep” order wins from the Middle East, the current financial year will show positive Year-on-Year (Y-o-Y) growth in West Asia’s order book, not order inflow.

“I’m quite optimistic about a healthy order inflow this year. The order book will grow because the revenue generated this year will be matched by an even larger order inflow,” he added. Saudi Arabia, and Saudi Aramco in particular, has significantly contributed to L&T’s order book over the past year. As of March, 38 per cent of L&T’s order inflow of Rs 3.02 trillion and 35 per cent of the conglomerate’s order book of Rs 4.75 trillion were from West Asia. Of its international order book of Rs 1.81 trillion, about 92 per cent was from West Asia. This substantial contribution, coupled with Saudi Arabia’s cautious approach to new investments, has made analysts skeptical about L&T’s prospects in West Asia.

Regarding feedback from the Saudi Aramco event and their investment sentiment, Sarma said, “They are investing. We do not see any change in the sentiment. There is nothing significant that we should be worrying about.” On order prospects in the renewable segment, Sarma added, “We are seeing a good prospect for orders internationally.” For the company’s green hydrogen plans, he said, “Green hydrogen activities have increased, with momentum picking up in several tenders, mostly domestic.” He mentioned that several tenders have been floated by the government, and L&T is participating. “So, in the next three months or so, hopefully, we’ll have some wins,” he added.

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L&T is participating in these tenders through its tripartite joint venture with Indian Oil Corporation and ReNew. Sarma confirmed that the tripartite venture has been awarded land at Kandla port on the western coast. He added, “Work is progressing and we’re looking to engage in discussions with some international companies.”

India’s largest infrastructure company, L&T, has secured orders worth over $4 billion from Saudi Aramco for expanding its gas projects, boosting shares by over 2.5 percent in morning trade on July 2.

The Rs 35,000 crore order from the state-owned petroleum and natural gas company is reported to be for Aramco’s gas compression systems. Saudi Aramco has planned a $110-billion Jafurah gas project in the eastern province.

The L&T order is part of Saudi Aramco’s $25 billion worth of contracts for engineering, procurement, and construction (EPC) related works, issued on June 30 for two of its gas expansion programs, reported Middle East business publication meed.com.

“I would like to clarify that we have already received these orders and they were announced previously. The recent event was just a formal commemoration of those awards. We continue to see a strong pipeline of prospects, and with our well-established presence, we are hopeful that we will secure further awards in the near future,” confirmed Subramanian Sarma, Whole-time Director & President (Energy), L&T.

The L&T order is part of Saudi Aramco’s $25 billion worth of contracts for engineering, procurement, and construction (EPC) works, issued on June 30 for two of its gas expansion programs, reported Middle East business publication meed.com.

“I would like to clarify that we have already received these orders and they were announced previously. The recent event was just a formal commemoration of those awards. We continue to see a strong pipeline of prospects, and with our well-established presence, we are hopeful that we will secure further awards in the near future,” confirmed Subramanian Sarma, Whole-time Director & President (Energy), L&T.

According to the MEED report, L&T has won two packages from Saudi Aramco.

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