One of the biggest clients of engineering major Larsen & Toubro is Saudi Aramco, the national oil company of Saudi Arabia. Early this week, Aramco announced its decision to pause expansion of its oil production capacity following a governmental directive. L&T’s chief financial officer R Shankar Raman tells Kalpana Pathak and Romita Majumdar that he sees this expansion pause as a stocktaking measure as Saudi Arabia’s 2030 vision has not been abandoned. Edited excerpts:

Will Aramco’s decision to pause expansion impact L&T?

Whatever the media has been carrying about Saudi Aramco pausing their expansion, etc., is something that you should expect when they implement a programme of $50 billion capex year on year, for three-four years in a row. It is to be expected that every now and then they will possibly take stock of how and what they have done. Their 2030 vision has not been abandoned. I am looking at it as a stocktaking, like we do in any interim-level projects. We have almost $16 billion worth of projects to be executed for them and that is going to keep us very busy for the next two-and-a-half years. And if I can say, some pause before they give the next round of orders is also good for capacity balancing for contractors who are engaged with them. We’re working with them closely. I would like to treat it as an interim stocktaking rather than a suspension.

The govt has announced viability gap funding (VGF) for offshore wind in the budget. L&T has had plans in the segment. How do you see this?
Yes. As part of our renewable business, we work on offshore opportunities, and offshore wind opportunities, and have been working in the UK, Europe, the North Sea, etc. So, we’ve been having several rounds of discussion with potential developers of these offshore wind projects. And there are a few opportunities we’re working on. Our experience will only help us get better prepared for Indian opportunities. I sense that VGF is some kind of intention that the government has announced. They have to flesh out the details like how they will classify eligibility, how they will administer the distribution, etc. We’ll have to figure that out. But it’s an opportunity, indeed.

What is the update on the semiconductor business?
We just set up the company and are in the process of hiring people. So, there will be a lag before we go to the market. We are hiring the business development teams on priority. The kind of chips they get the orders for will determine the type of design engineers we need to hire. The technology is so fast changing that we have to make sure that our recent hires are the most current in terms of technology (skills). So, the organisation-building effort is going on and my sense is it will take six months for us to confidently go and confidently tell the customer what we can do for them. But all the pre-marketing and business development efforts are happening. It has been created with some long-term vision. I expect the organisation to be better prepared to tackle fiscal year 2025-26.

Have you identified the key leadership?
The CEO is in place and our entire board approval was based on a CEO and some leadership team who shared their aspiration and plans for making it worthwhile for L&T to invest.

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