So, all in all, we are seeing a good level of activities and yes, the prospect opportunities and pipeline remain quite strong at this point in time.

Things have been looking pretty good for L&T, especially in the hydrocarbon segment as well because you have won significant orders in the segment last year. If you could help us understand how the execution is progressing in that particular segment of these orders? Are you on track for margin and the pipeline expectations for these orders?
Subramanian Sarma: Yes, it has been a little over a year. We got the orders mostly in the second quarter of last year and so little over a year and so far so good. Jobs have been moving well. We are slightly ahead of our plan and engineering is substantially complete and also the procurement and we are into the manufacturing, construction work at all the sites have started well and so at this point in time, again, it is looking good. We are on track and we are on track with respect to all the parameters.

What about the nature of the investments and the kind of orders that you are looking at bagging? Is it getting a bit more competitive or how is the entire scenario in terms of the pipeline and the competitive intensity in the region?
Subramanian Sarma: I have said this before. There are two or three themes running concurrently. One is, of course, the development of conventional fossil fuel, both oil and gas in the region.

Second, in addition to that, all the countries are looking at how to expand their green footprint or reduce the carbon footprint in other words and therefore, there are prospects with respect to blue ammonia, green ammonia, and also a lot of renewable projects, gas to power projects, so that is the second theme. And third is that they are also looking at how to monetise and create more value through installing petrochemical facilities. All the three themes open up a good amount of opportunities for us because we are present in all of those and the prospect at this point in time is about $10 to $12 billion of prospects we are working on. We will have to see how this unfolds in the next few quarters.

One cannot take eyes off what is happening in West Asia, particularly on the geopolitical uncertainties. How do you assess the risks related to project execution and supply chain continuity? Any risks that you have witnessed on the back of that or is it business as usual?
Subramanian Sarma: That is a good point. I would not say business as usual entirely, but substantially, yes. There have not been any major issues with respect to execution, except for logistics because logistics did get impacted because of the Red Sea issues and though the situation is much calmer now, but there are risk perception of the logistic service provider is still high, so they kind of take a longer route and so there were some delays in terms of getting our material, which is primarily coming from Europe.

The one which is coming from Asia or Asia-Pacific is not that much affected, but the one which is coming from the US or Europe has to take a longer route. Other than that, on the ground we do not see any significant impact of the geopolitics, much calmer. And hopefully, next year we will see some peace deals being made and the situation becoming calmer.

What about some of these execution issues? At one point of time, I remember having this conversation with one of your peers that labour issues are cropping up quite a bit. There is that problem of inflation around the labour costs as well. Have things eased out? And is execution still a challenge or is it more of the same?
Subramanian Sarma: No, labour issue has been a problem for quite some time. So, it is not something new. I mean, we face that in domestic as well as international markets. Post COVID, the labour situation has definitely got much more tighter and to attract a skilled workforce into our industry has been an issue for all of us. But nothing significant, no significant change now. I mean, if at all, it has got only better. Having said that, I would say that the situation in Bangladesh did a little bit impact in terms of we could not access the resources from that country for some time, but that is also getting normalised now.

If you talk about West Asia, Middle East, it actually contributes approximately 34% of your total order book, but what is the competition landscape like in that entire region, especially for the hydrocarbon business? What is the competition scenario looking like and how well placed is L&T there?
Subramanian Sarma: Well, I think through strong performance we have built a good brand for ourselves and a good reputation. So, the good news is at least that we are invited on all the bids which opens up our funnel, which is very important. And then, of course, we see competition. I think customers would like to have competition because that is how they can keep their cost in control. But most of the competitors are coming from Europe and Korea. So, there is kind of, I would say, peer competition, reasonableness, and there is a rational bidding, so that does not hurt us. I mean, we always love to have competition because that is what keeps us always on our toes.

Talking about the green opportunity, we saw a big Aramco order getting deferred in Saudi Arabia and a few others have happened as well. Would whatever order depletion is happening in the traditional hydrocarbon segment be offset by the newer ones coming up in hydrogen and ammonia or in between could there be a scenario of lower order inflows purely because the entire industry is going through this paradigm shift?
Subramanian Sarma: I do not think it is one against the other because all of them will coexist and in the oil and gas exploration, there is a good amount of capital required perpetually because the reservoirs get depleted and maintaining current production itself requires a huge amount of capital, so that will continue. And then, there will be newer projects, newer developments, and there could be some kind of capital allocation between green and fossil.

But at this point in time, there is a huge focus on building the fossil. There is very little focus on green ammonia and blue ammonia. But the country as a whole, not necessarily Saudi Aramco, but other investors and the government are also establishing a lot of infrastructure related to renewable energy, solar, wind, and also gas to power.

So, as long as prices remain in the current range or even a little higher, lower, such capital expenditure will continue. We do not know what will be the impact of President-elect Trump taking over his office in January and whether there will be any softening in oil prices. In the short term, maybe there will be some volatility, we will have to wait and see, but medium-term, long-term all these policies will continue because that is what all these countries need. They need that for employment, local development and also for generating alternative revenue streams other than the oil stream.

How is your carbon light solutions segment doing? What about the order pipeline or the margin growth prospect? What should one look out for in the segment?
Subramanian Sarma: Carbon light had a good breakthrough. We declared and we announced, we had two large contracts awarded to us. I mean, of course, it is under limited notice to proceed, but that should get opened up by end of December and these are very significant awards for that business and I think we will have better margin than before because we had made a very measured and informed decision in terms of bidding there and there are more prospects, so much more so in domestic market.

We are also looking at gas to power opportunities in the Middle East. We have a bit of a preferred status there with one of the main developers with whom we have been working, so maybe something will unfold. So, all in all, that business is looking much more buoyant. At least for the next two-three years, we see a good momentum.