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See double-digit growth for hydrocarbon business: L&T Hydrocarbon

In an interview to CNBC-TV18, Subramanian Sarma, CEO & MD, L&T Hydrocarbon spoke about the latest happenings in his company and sector.

“Hydrocarbon has been going through a restructuring process. The order flow is picking up”, he said.

Below is the verbatim transcript of the interview.

Nigel: Orders are coming in thick and fast in the last few days, we know that the total order inflow expected for Q4 was around Rs 55,000 crore. In this quarter so far we have seen around Rs 25,000 crore but what was the internal target from the hydrocarbon business if you could tell us that number?

A: I cannot share the budget number but I can tell you that we have exceeded the budget number for hydrocarbon.

Nigel: How much have you achieved till now?

A: I cannot disclose that number.

Nigel: What are the total inflows?

A: That will be more than Rs 18,000 crore for the full year.

Reema: How will this compare with the prior year on a year-on-year (Y-o-Y) basis?

A: There has been a significant growth but I cannot disclose those numbers because our results are not yet finalised.

Reema: At least more than a double digit increase?

A: Yes.

Reema: Can you tell us what led to these increased order flows and do you believe this more than Rs 18,000 crore of an annual runrate for hydrocarbon is sustainable or was there any element of one off, where does these orders come from?

A: Hydrocarbon has been going through a restructuring process. The order flow is picking up. Ours is a very cyclic business so it is very difficult to say that Y-o-Y there will be some growth, some years could be more, some years could be less but on an average over a two-three year cycle, you should have a continuous 10 percent growth that is what we are all targeting.

Nigel: What kind of margins you can enjoy on this kind of an international order. It is a Middle East order so will there be any delays terms of payment, some colour?

A: We are very disciplined in terms of bidding, we have set our own parameters what we can accept, what we cannot accept, so we operate within that framework and margins are pretty consistent with what the industry standard is.

Nigel: That would be approximately?

A: It is in a single digit. Something like 8-9 percent.

For full interview, watch video…