Kamal Ghorui
MUMBAI: Construction and engineering giant Larsen & Toubro, which has been operating in West Asia (WA) for over three decades, said a small portion of its regional projects has been affected by the ongoing geopolitical crisis. Deputy managing director Subramanian Sarma said 5% of L&T’s West Asia projects, mainly those near sensitive areas such as military bases and airport zones, have been paused, with some work halted at customer request.“However, 95% of the projects are operating as usual, which is good news across our 100 sites in the Middle East,” he added. The company, which employs 8,000 people in the region, said all its staff and roughly 2,000 family members are safe. Another 10,000-15,000 contractors working on various projects are also unaffected. Sarma added that the company is closely monitoring the situation on a daily basis, with senior leadership teams stationed in the region in constant communication with employees, customers, government authorities and other stakeholders.While operations remain largely stable, he flagged logistics as a key concern. Over the past two weeks, material movement, especially sea shipments from China and Europe has been affected, with fresh consignments yet to be dispatched.However, supplies sourced locally within countries such as Saudi Arabia and across Gulf Cooperation Council nations remain unaffected, with road transportation continuing as usual.To mitigate disruptions, L&T is exploring alternative logistics routes, including shipments via ports in the Red Sea and Oman followed by road transport. The company has enough raw material for two to three months but warned that a prolonged conflict could create supply challenges, particularly through seaports.Despite the situation, customer engagement, invoicing and payments continue without disruption.West Asia, which was described by Sarma as a “second home,” accounts for roughly a third of L&T’s inflows, backlog and revenue.Analysts at foreign brokerage CLSA had estimated that a March blockade of the Strait of Hormuz could reduce the company’s consolidated earnings per share by 1.8%. L&T’s regional operations span civil construction, hydrocarbons, renewable energy and data centres.Sarma said that the company has built a robust framework to navigate risks. “As we built our West Asia portfolio over the years, we always discussed how to deal with such geopolitical situations. Our risk committee and board have had extensive deliberations. We structured our portfolio through diversification, careful customer selection, and the deployment of senior leadership in the region- six or seven senior vice presidents are based there. This preparedness is helping us manage the current situation effectively.”
