L&T electrical and automation eyes local market to drive strong business growth

L&T electrical and Automation, the $1 billion unit of Larson and Toubro, expects infrastructure projects by the government and investment in upgrading existing factories by corporates to drive business faster over the next few years. The firm says that business from upgrading switches and drives contributes to 13% of its revenue, up from 5% a few years ago.

"When somebody is not setting up new factories, they want to extend the life of their existing installations," said PK Bajaj, executive vice-president, L&T (Electrical & Automation) in an interview. "We hear words like upgrades, add one line, debottle-necking lot more than new capacities. These are efforts to release those capacity which otherwise they are not bothered," he added.

L&T electric has been growing at around 8-10% over the last few years in a slow domestic market, which was compensated with business in West Asia. With the slide in crude prices and commodities in markets such as West Asia, Africa and Southeast Asia, the firm expects growth coming from the Indian market.

"In the West Asia, with crude at $30 a barrel, investment slows down and the reflection has to happen in India which is benefiting from the $30 crude prices. We are expecting growth in India, much faster than the last few years," said Bajaj.

The company has four factories in the country with around 80-85% utilisation of capacity as it builds products and solutions for the local market as well as offering white label products for brands in Europe. It invests around Rs 200-250 crore every year on its factories and Rs 150 crore on designing new products for the market, whose shelf life has reduced to five years from 15 years.

The government should step up investment in infrastructure projects to fuel demand for products as it has reaped the benefits of savings from low oil prices, revenue from auctions in telecom and coal sector, he said. The private sector is stressed due to high debt on their balance sheets.

"We see macro-economic movements happening. But has the concrete started pouring on the ground? No, not yet," he said, adding, "The government has to kickstart investment because the people are stressed and banks are stressed."

Bajaj said the firm has introduced newer products, which have sensors that talk to each other, or the internet of things products that help organisations manage their power infrastructure better.

"These are soft products which link up all the switches and boards. You can remotely look at load management in factory or manage switches if the MCB trips. The aim is to empower the customer to derive efficiency and safety," he said.

L&T electrical and automation is also building the city surveillance infrastructure for Mumbai with over 6,000 cameras that would have built in analytics integrated with the police backend to provide insights on traffic movement and law and order. The firm has installed similar infrastructure for Ahmedabad.