Mumbai, May 27 - Increasing domestic competition coupled with delay in decision-making in awarding new projects have been a major concern for leading local EPC companies, which are also scouting for opportunities in global markets, say industry experts.
"The competition in the domestic market has become intense. Besides, there has been delay in decision making as well as awarding of contracts. In such an environment, we are stepping up our focus on international markets," Larsen & Toubro chief financial officer R Shankar Raman said.
L&T plans to focus on emerging markets like the Gulf markets, especially the UAE, Oman, Saudi Arabia, Kuwait and Qatar, apart from Indonesia expanding its business.
"We do believe that emerging markets are coming back to some ordering way (in the infra sector) as compared to the past few years. With the kind of efforts we are putting, we believe to be able to have a reasonable chunk of orders in international markets, which to an extent will offset deficit in the domestic market, should there be one," Raman said.
The local Engineering Procurement and Construction (EPC) players are not only facing competition from domestic players but also global companies who have been compelled to look at alternate emerging markets, Cushman & Wakefield India Executive Director (project management) Harleen Oberoi told PTI.
"Local EPC players are facing competition from global vendors entering the local markets, who have been compelled to look for alternate emerging markets in the world owing to slow down in their economies," he said.
The near-complete shutdown in Europe and slow down in the US have compelled EPC players to look at the Middle East and African countries, he said.
"Infra and telecom are providing opportunities for local players in the Middle East and Africa, alongwith Southeast Asia, especially Myanmar and Sri Lanka," Oberoi said.
KEC International Managing Director & Chief Executive Ramesh Chandak said domestic competition is also putting pressure on their margins.
"Over the last few months, infra spending has declined. Besides, the number of projects awarded have also fallen. So, when few projects are awarded, there are several who bid for it and the lowest bidder takes away the contract.
Since such companies are not getting much contracts here, the pressure on their margins is growing," he said.
However, industry experts are expecting the scenario to get better over the next few months.
"We are still not a dead market, there is still a huge potential. But there is a need for investments in key infrastructure sectors including power, roads, housing, etc if the economy has to grow," Knight Frank India Executive Director Naushad Panjwani said. PTI