Please introduce your company Leighton Welspun Contractors Pvt Ltd (LWCPL). What was the rationale behind the association of Welspun Group, India and Leighton Holdings Group, Australia and how do you see the synergies between the two?
Leighton Welspun Contractors Pvt Ltd has almost 15 years' experience operating in India and has a track record of successful delivery on more than 30 projects ranging in size from 50 crore to almost 4000 crore. The Company has expertise across four major disciplines, Oil and Gas, Building, Infrastructure and Mining, and has completed a diverse range of projects around the country. In the infrastructure sector, our capabilities include seaports, roads, pipelines, tunnels, bridges, power generation facilities, and airports. The partnership with Welspun was founded on both increasing localisation of the business as well as providing a better means to access the expanse of work expected to come via the PPP route. Leighton's business plan is centred around its core strength as a construction contractor and Welspun has a strong desire to establish itself as a Developer of infrastructure. Hence there is a good fit between the two companies.
What are important industrial sectors being served by the company and LWCPL areas of expertise, including a reference to some of the milestone projects executed in India and industry's response on delivering quality projects, on time and within the set economic parameters?
India is developing at a fast pace, and change is very much the norm. We have found very strong support from our clients for our services because our ability not only to promise quality, safety and on time delivery, but actually achieve our promises, is proven in our track record. The market has not always valued these outputs as measures of success, but is now very much starting to realise that they are in fact inextricably linked to the most cost effective overall solution. We train our own labour, we plan our work extensively and we place a strong emphasis on supervision. We have completed landmark projects for ONGC such as the very large Pipeline Replacement Project 2, Water Injection North Revamp, and the G1-GS15 shallow water works. These projects were all complex projects, completed on time, and with various records having been achieved for safety and productivity. This has benefited the client and the country. On the prestigious Wave Development Project in Noida, we have supported the client with considerable savings through value engineering, and on the Ramunajan IT Park in Chennai, we have worked with Tata Realty in India's first Alliance contract, to deliver world class construction that has become a showcase for the industry. We are also presently working on India's longest road tunnel at Chenani in Jammu & Kashmir and have just completed a new coal berth at the Visag Port, three months ahead of schedule.
What is Leighton Welspun's order book status as on date and the important projects in hand in building, infrastructure and mining segments?
We have a good range of projects in hand at present, with our largest being the Chenani Nashri road tunnel referenced above. But our work extends across Oil and Gas, Building, Infrastructure and Mining. We see our business growing in all these sectors. We have recently been awarded work for Jindal Steel and Power at their Angul Steel Plant, residential towers in Kochi for Tata Realty, and works on Proctor and Gamble's new facilities in Hyderabad.
We are a strong believer in developing innovative approaches to our work. We encourage our staff to look at projects and problems not as they have been traditionally done, but how they can be done better, safer and faster. This may mean new construction techniques, alternative equipment, and better engineering. We find that our ability to assure we conduct to the design, and build quality into our workmanship, gives designers a lot of comfort to use leaner and more modern designs, which in turn saves our clients' money. Reliability in regards to time, also has a big benefit for our clients in that they start earning earlier and are not exposed to risk of finance costs due to delay. The value we bring is therefore on multiple fronts.
Your company has successfully executed NHAI's most iconic tunnel project—in Northern India. What are important design and construction features from conceptualization, designing to completion benchmarking company's core values?
One of our core values is integrity. We do what we say and we say what we do. This applies to our staff, our customers, the community, and our suppliers and partners. This integrity of practice assures a strong cohesive working team to deliver projects. On Chenani, we have been able to develop a program that is set to achieve completion well ahead of the project targets. We use planning and manage logistics as a core tool for our success and we monitor very closely against the progress objectives. Our innovative use of tunnel forms, blast patterns, and the latest in automated tunnelling equipment support our efforts.
As a reputed contractor, you have executed a number of projects in the country with good credentials. What is your assessment of reasons which usually block projects in the country, the current scenario we witness quite often? How are these factored getting resolved under your project management systems?
A successfully delivered project is a result of a carefully managed approach. It's an integrated association of a number of key parameters: good planning and controls; the right supervision, trained labour, common goals and no hidden agendas. We work with people, and are passionate about delivering the right outcomes. The market has traditionally given a lot of emphasis to the "at award" lowest price, but when you consider factors such as delays, rework required due to poor workmanship, impact on reputation from poor project performance, and cost blowouts due to claims, "L1" is not often the best for project outcome. There is a lot better understanding of this in the market than a few years ago. The future will almost certainly be much more about overall value than simply low at award price, and those who understand and embrace this, whether as project owners, developers, or contractors will be best placed to capitalise on future growth. The understanding that contracting models also need to change in order to maximise value is another area of progress. Engineering and design typically constitute 5% of a project in terms of cost, but influences 85% of the final project cost. By involving the contractor early either through more use of design and build, Pre-construction services, or through newer forms of contracting such as Alliances, project owners are able to mitigate risk and get the best value out of engineering and construction methodologies.
How conducive is the regulatory business framework in India? What changes do you look forward to create a more enabling business environment in the country?
India's regulatory framework in most areas is quite sound, albeit implementation can be somewhat variable. Key areas where there is opportunity for improved performance include taxation, and this will hopefully be evident when the GST is introduced. The regulatory framework around mining and mine development is also in urgent need of action. India has an abundance of coal in the ground, yet is suffering a substantial shortage in terms of coal for the power industry. Clearing the hurdles, to see mines start to open up, developing the distribution networks and opening up freedoms to trade coal would surely be welcome.
A word about the business performance of your company in last two years or so. What are the plans for future to take this performance to its next level, and gearing yourself well to take advantage of emerging business opportunities that country's infrastructure holds with focus on massive infrastructure development by offering latest construction technology and methodologies outputs for these projects.
We have been in India for almost 15 years now. We have plans to be here many more and to continue to grow our business. Our objective is not growth for growth's sake but growth that is profitable and adds value for our shareholders. There are a lot of great projects and opportunities coming up in India and we are looking forward to being part of India's continuing growth story.