L&T Reports Minimal Impact on West Asia Operations
Construction and engineering powerhouse Larsen & Toubro (L&T) has reported that a small fraction of its projects in West Asia are currently impacted by the ongoing geopolitical crisis. According to Deputy Managing Director Subramanian Sarma, approximately 5% of the company’s regional projects, particularly those located near sensitive areas such as military bases and airports, have been paused at the request of clients. However, the majority of operations remain unaffected, with 95% of projects continuing as planned across the company’s 100 sites in the Middle East.
Project Status and Employee Safety
L&T has been a significant player in West Asia for over 30 years, employing around 8,000 people in the region. Sarma confirmed that all employees and approximately 2,000 family members are safe amid the turmoil. Additionally, between 10,000 to 15,000 contractors engaged in various projects are also reported to be unaffected by the crisis. The company is actively monitoring the situation, with senior leadership teams stationed in the region maintaining constant communication with employees, clients, government authorities, and other stakeholders to ensure safety and operational continuity.
Logistics Challenges
While the majority of operations remain stable, Sarma highlighted logistics as a critical concern. Recent weeks have seen disruptions in material movement, particularly affecting sea shipments from China and Europe. Fresh consignments have yet to be dispatched, although local supplies sourced from countries like Saudi Arabia and other Gulf Cooperation Council nations continue to flow without interruption. To address potential supply chain disruptions, L&T is exploring alternative logistics routes, including shipments via ports in the Red Sea and Oman, followed by road transport.
Future Outlook and Risk Management
Despite the current challenges, L&T has sufficient raw materials to sustain operations for the next two to three months. However, Sarma cautioned that a prolonged conflict could lead to supply chain issues, especially through seaports. Notably, customer engagement, invoicing, and payments are proceeding without disruption, ensuring financial stability during this period. West Asia is a crucial market for L&T, accounting for about one-third of the company’s inflows, backlog, and revenue.
Sarma emphasized the company’s preparedness for such geopolitical challenges, stating that L&T has developed a robust framework to navigate risks. The company has diversified its portfolio and carefully selected customers while deploying senior leadership in the region. This strategic approach has positioned L&T to manage the current situation effectively, demonstrating resilience in the face of adversity.
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