Larsen & Toubro 's Chief Financial Officer R Shankar Raman has expressed optimism about government capital expenditure in the upcoming budget, anticipating a 10% increase for FY27. Speaking on infrastructure investment priorities, Raman emphasized the critical role of government spending in supporting India's development goals while addressing concerns about private sector investment dynamics.

Budget Expectations and Infrastructure Focus

Raman expects the government to maintain its infrastructure investment momentum, building on the substantial allocation in the current fiscal year. His projections are based on India's long-term development objectives and the government's continued commitment to infrastructure growth.

"If India is to become a developed economy by 2047, infrastructure has a lot of role to play, and I think the government is seized of this. I am hopeful that they will allocate adequate resources in the budget to be able to do that," Raman stated.

Project Execution and Quality Concerns

The CFO highlighted significant challenges in project execution, particularly regarding contractor selection processes. He noted that awarding projects to the lowest bidder often leads to execution delays when contractors lack adequate technical capabilities. However, Raman welcomed recent government recommendations for departments to adopt qualitative-based pricing mechanisms.

Under the new approach, weightage is given to factors beyond cost, including:

• Timely project completion capabilities
• Technical expertise and track record
• Overall execution quality

Raman emphasized that maintaining balance between pricing and execution capabilities will help ensure qualified companies secure contracts, ultimately improving project outcomes.

Manpower Challenges in Construction Sector

The construction industry continues to face persistent manpower shortages, a challenge Larsen & Toubro has been highlighting consistently. Raman identified several factors contributing to this issue:

• Alternative Employment Options: Availability of other job opportunities makes construction less attractive
• Government Employment Schemes: Programs promising up to 125 days of employment discourage workers from relocating
• Pandemic Impact: COVID-19 changed worker mindsets about mobility and proximity to home

Raman suggested that taking projects closer to workers' places of residence could address these challenges, requiring deeper penetration into the country's interior regions.

Private Sector Investment Landscape

Despite concerns about private capital expenditure growth, Raman does not fear resource crowding out due to high government spending. He noted active private sector investments across multiple industries:

• Automobile sector
• Construction equipment
• Steel industry
• Minerals and metals
• Semiconductor manufacturing
• Electronics sector

The CFO praised the government's openness to industry consultation during the budget-making process, calling it a sign of mature governance that considers stakeholder input in policy formulation.

Outlook for Infrastructure Development

Raman observed a significant increase in the conception of large infrastructure projects, noting that "infrastructure has miles to go" in India's development journey. The combination of government commitment, adequate liquidity, and systematic improvements in project allocation processes positions the sector for continued growth, supporting the broader economic development objectives.

Larsen & Toubro 's Minerals & Metals (M&M) business vertical has secured major orders from Steel Authority of India Limited (SAIL) and other customers for EPC projects and products in the domestic metals sector, the company announced on January 2.

Stock Performance and Recent Momentum

The stock was up 0.20% at ₹4,152.10 apiece during trading on Friday and has gained 11.80% in 2025. This latest order win adds to L&T's recent success streak, having won three orders collectively worth ₹15,000 crores in four days recently.

SAIL Partnership and Steel Plant Expansion

L&T and SAIL maintain a long-standing relationship spanning several decades, marked by successful execution of numerous metallurgical projects across India. Under SAIL's ambitious modernisation and expansion programme, the company plans to increase the crude steel capacity of the IISCO Steel Plant at Burnpur, West Bengal.

Critical Process Plants and Equipment

As part of the IISCO Steel Plant expansion, M&M has been awarded the complete engineering, procurement and installation package for critical process plants that form the core of the new steel complex:

• Coke Oven Battery
• By-Product Plant
• Basic Oxygen Furnace
• Specialised equipment package for material handling

Bokaro Steel Plant Project

Simultaneously, SAIL's Bokaro Steel Plant in Jharkhand is undergoing a major upstream expansion. L&T has been awarded a package to establish Sinter Plant 2, reinforcing its strong presence in the steel sector.

Additional Material Handling Orders

The M&M business has secured multiple orders for specialised material handling equipment from various clients across India:

Management Commentary

D K Sen, Advisor to CMD, Development Projects & Minerals & Metals, L&T, commented: "L&T has been a major contributor to India's industrial growth story in the metals sector, and our association with SAIL is a proud chapter in our journey. These orders underscore L&T's ability to deliver world-class metallurgical infrastructure with engineering precision, safety and sustainability at the core."

T Kumaresan, Senior Vice President & Head – Minerals & Metals, L&T, added: "The trust placed in L&T by SAIL once again validates our expertise in delivering complex, technology-intensive projects under challenging schedules. These wins reaffirm our commitment to delivering projects on time and demonstrate our technical capabilities."

According to L&T's order classification system, these contracts fall under the 'Major' category, representing orders valued between ₹5,000 crores to ₹10,000 crores. Larsen & Toubro is a USD 30.00 billion Indian multinational engaged in EPC Projects, Hi-Tech Manufacturing, and Services.