Hit by sub-contracted labour shortages post COVID-19 lockdowns, L&T expects normalcy in Q2

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Published: July 26, 2020 5:10 PM

Ninety per cent of the domestic project sites of the company are working with restricted labour capacity, the company said in its latest annual report.

However, he expected things to stabilise to near regular levels in the second quarter of the current fiscal with normalcy being gradually restored.However, he expected things to stabilise to near regular levels in the second quarter of the current fiscal with normalcy being gradually restored.

Admitting that Larsen & Toubro has not been immune to labour disruptions due to COVID-19, the group’s chairman A M Naik has said sub-contracted labour of the company dipped even below 1.6 lakh post pandemic induced lockdowns from 2.25 lakh earlier.

Ninety per cent of the domestic project sites of the company are working with restricted labour capacity, the company said in its latest annual report.

Images of migrant workers returning to their homes, some on foot, some by hitch-hiking and a large number through special ?Shramik’ trains and buses arranged by the central government in coordination with state governments have been imprinted on minds through mainstream and social media, Larsen & Toubro (L&T) Group Chairman A M Naik said in the report.

While saying that the company on its part has taken measures to provide relief to workmen at its project sites, he admitted that it has not been immune to the impact of labour disruption.

“From a sub-contracted labour force of around 2,25,000 working at project sites prior to the Covid-19 outbreak, the workforce came down to 1,60,000 at the beginning of the lockdown and dropped further as project sites were progressively reopened,” Naik said.

However, he expected things to stabilise to near regular levels in the second quarter of the current fiscal with normalcy being gradually restored.

Amid widespread concerns about the plight of daily wage earners, Naik said the company took it upon itself to ensure that the 1,60,000 contract workmen at its project sites received good care.

“We continued to pay them their wages, provide food, shelter and medical assistance while maintaining prescribed Covid 19 preventive & containment protocols. This has involved an outlay of approximately Rs 500 crore per month,” he said. The COVID-19 pandemic and its fallout makes it difficult to forecast the future with any degree of certainty, he said.

“While we are hopeful that the 2nd half of FY 2020-21 will herald better economic and business activity in terms of tendering, good liquidity and revival of labour and supply chains, it would be premature to predict the company’s business outcomes for FY 2020-21,” Naik said.

The Company is remobilising the workmen as a significant percentage of the migrant workmen have gone back to their villages, the company said.

About welfare activities it said the various project sites across India are housing workmen in labour camps equipped with all essential facilities, medical care and competent supervision.

It added that all international sites have also resumed work after some interruptions.

The engineering and construction conglomerate also said that it is now focussing on long-term solutions like leveraging advanced construction technologies for reducing dependence on labour.

The major challenge for the construction industry will be supply chain disruptions including limited availability of labourers as the migrant workers constituted a very large share of the workforce, it said.

“The business (Building and Factories) has already initiated the implementation of long-term solutions to face such challenges like reducing the dependency on human resources by leveraging advanced construction technology,” it said.

It said its Realty Business will be impacted by shortages of labour.

“…the lockdown and stalling of construction activity will lead to delayed construction schedules, which will be further impacted by the unavailability of labour,” it said.

Larsen & Toubro is an Indian multinational engaged in technology, engineering, construction, manufacturing and financial services with over USD 21 billion in revenue.

Last week the company reported a 68.37 per cent decline in profit to Rs 536.88 crore for the first quarter ended June 30, mainly due to COVID-19-induced lockdown that stalled project executions. Its total income fell 27.19 per cent to Rs 22,037.37 crore in April-June quarter, against Rs 30,270.94 crore in the year-ago period.

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