MV Kotwal, Whole-time Director & President (Heavy Eng), L&T said that the involvement of private sector in defence sector has been very slow until now.
The Department of Industrial Policy & Promotion (DIPP) has granted industrial licences to several defence companies. In tune with the Modi government’s ‘Make in India’ push, the DIPP has cleared most of the 34 industrial licence proposals stuck since 2012.
Speaking to CNBC-TV18 about the same, MV Kotwal, Whole-time Director & President (Heavy Engineering), L&T said that the company sees strong orders coming from defence sector.
He added that the company has been present in this sector for almost 25 years and has expertise in building key warships and submarines.
Kotwal sees award opportunity of USD 18-20 billion in army and navy each.
Also Read: Govt must mull over 74% FDI in defence, says KPMG
Below is the verbatim transcript of MV Kotwals interview with Anuj Singhal and Latha Venkatesh on CNBC-TV18.
Latha: What is L&T’s opportunity in the space?
A: The opportunities are absolutely huge. This is primarily because we have been in this Defence area for more than 25 years now and therefore we are very well prepared and positioned in all respects.
Latha: The proposal that was cleared by the DIPP, Pipavav Defence got some seven orders, Punj Lloyd aviation two, Tata Motors one, Piramal Systems one, we didn’t see any L&T name or orders over there, nothing pending with the government as of now, is it more a question of you are going to bid?
A: No. The announcement is about licenses to manufacture and not orders at all. These specific licenses stem from the fact that in 2002, the first time the government came open talking about involvement of private sector, they had asked for companies to apply for licenses and I must mention here that L&T was the first corporate and today the only corporate which has licenses to manufacture the entire range of defence equipment whether it is army, navy or air force, the entire range is already there with us since 2002. So what has happened and what has now been talked about is very recent applications when I say recent they are 2011 applications some of them have got cleared but this is only licenses to manufacture, that is nothing to do with orders. That will happen much later.
Larsen stock price
On December 05, 2014, at 14:10 hrs Larsen and Toubro was quoting at Rs 1643.45, up Rs 14.05, or 0.86 percent. The 52-week high of the share was Rs 1774.70 and the 52-week low was Rs 951.60.
The company’s trailing 12-month (TTM) EPS was at Rs 63.52 per share as per the quarter ended September 2014. The stock’s price-to-earnings (P/E) ratio was 25.87. The latest book value of the company is Rs 362.41 per share. At current value, the price-to-book value of the company is 4.53.