With capacity expansion plans on hold and government spending taking a backseat due to election code of conduct, Larsen & Toubro (L&T) started to feel the heat on the execution side.

However, this can be seen a minor blip for the company that actually saw its highest revenue, operating profits and even net profit being recorded. Net sales for financial year 2008-09 stood at Rs 33,647 crore, on a standalone basis. And operating profit at Rs 4425 crore and the net profit was at Rs 3,482. Key ratios however dipped, with the operating margin dipping from 13% level 2007-08 to 12.8% in 2008-09, similarly the return on equity also slipped from 20.58% to 17.55%.

According to chairman A M Naik, ?The company performed well despite the adverse scenario in 2008-09. Order inflows grew by 23% over 2007-08, and in line with our efforts to diversify the geographical spread of our businesses, international orders constituted 15% of the total order inflows. The Middle East continues to be a focus area for us and we have enhanced our footprint in the GCC Region. The order book position stood at Rs 70,300 crore at the end of financial year 2008-09, giving us some revenue visibility going forward.?

Moreover, this was a year when L&T, a professionally managed company, saw an internal reorganisation where complementary business units have been organised under vertically integrated busines- ses termed ?Operating Companies? (OCs). These OCs have their own internal boards and embedded shared service functions such as HR, resource support and finance & accounts to enable self-sufficiency. Naik strongly believes, ?The new structure opens up opportunities for leadership development, provides a platform for nurturing internal resources and is expected to provide focus to businesses within each OC. The structure aims to enhance shareholder value creation.?

Moreover, adverse economic conditions seem to have worked to the company?s advantage in enabling it to position itself as a stable career destination.

Going ahead, the company would be looking at several initiatives. The management sees the hydrocarbon business as a strong opportunity?both in the upstream oil and gas exploration/extraction and in midstream refineries. Increased capacity in the Middle East is likely to yield some growth in this sector in years to come, adds Naik.

Road projects have started receiving focused government attention and are likely to witness increased awards on build operate and transfer (BOT) basis. Naik reckons, ?This is an area where we can leverage past record, scale, design strength and execution capability as and when tenders are floated as a first step towards final award of these projects.?

The company would also be looking at leveraging its strong track record in the area of evacuation, storage, treatment and transmission of bulk water to exploit emerging opportunities in states that are water-deficit. ?Our power equipment manufacturing venture is an integral part of our efforts to grow this business in years to come and we have started receiving large orders in this space,? says Naik. He also points out towards nuclear power generation, which is slated to grow by an order of magnitude over the next decade and more, can spell major growth opportunities for L&T in the long term. And then there is the Indian Railways and the defense sector, when privatised, offers large business potential and this is an area where L&T is well positioned.

In the December 2009 quarter, the company managed to grow its order inflow by 22%, over the corresponding period of the previous year, gross revenues during the period dipped to Rs8139 crore lower by 6%. However better execution saw its operating pofit margins grow from 11.2% to 12.5%. And, the company?s order book as on 31st December, 2009 has attained a significant size of Rs91104 crore.

So as the economic activity picks up and execution of projects gets better L&T would be in a position to take maximum advantage.