India Investor Conference: Larsen & Toubro's Growth Strategy and India's Capex Future

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At the India Investor Conference 2026, R Shankar Raman, President, Whole-time Director and Chief Financial Officer of Larsen & Toubro, shared his views on India's investment cycle, project execution, talent, technology, global operations and the future direction of the company. In a conversation with Nilesh Shah, Managing Director of Kotak Mahindra Asset Management Company, he offered insights into what has helped Larsen & Toubro stay relevant for decades and what lies ahead.

What Makes Larsen & Toubro Different

When asked why no other company has been able to replicate the scale and success of Larsen & Toubro, Shankar Raman pointed to the company's culture and operating philosophy.

According to him, the organization is driven by professionals who earn their place through performance and contribution. The company encourages experimentation, accepts that mistakes will happen and allows teams to explore technologies that may not yet be fully proven.

He also highlighted the nature of the engineering and construction business. Every project brings uncertainty, and success depends on how well teams respond when plans change. The ability to adapt, create alternatives and solve problems has become part of the company's character.

Another important factor has been talent retention. Many employees spend decades at the company, creating continuity and preserving institutional knowledge. Shankar Raman said this long-term commitment has played a major role in shaping the company's capabilities.

Why India's Investment Momentum Must Continue

Shankar Raman believes India must continue investing in physical infrastructure, urban infrastructure and industrial infrastructure.

He noted that India still has significant work to do in improving infrastructure quality. Investments create opportunities, generate employment and strengthen the country's long-term competitiveness.

He also spoke about the changing global environment. Geopolitical developments have increased uncertainty and encouraged countries to focus more on self-reliance. Against this backdrop, he believes India should continue pursuing its investment agenda.

While financing is often seen as a challenge, he expressed confidence that resources can be found for well-designed projects. Global development institutions and domestic financial institutions are willing to support strong programs.

For him, the bigger challenge is execution.

Project delays can significantly impact returns. A delay of six months or a year can change project economics completely because interest costs during construction increase sharply. He stressed that governments, policymakers, contractors, suppliers and all participants in the ecosystem must work together to ensure projects are completed on time.

The Execution Challenge Behind a Record Order Book

Larsen & Toubro currently has its largest-ever order book, approaching ₹7.5 lakh crore.

Managing projects of this scale requires a massive workforce. Five years ago, the company handled an order book of around ₹3 lakh crore to ₹3.5 lakh crore with approximately 1.5 lakh workers. Today, it engages around 4 lakh workers across projects.

Even this scale presents challenges.

Construction work is affected by harvest seasons, sowing seasons, festivals and personal commitments that require workers to return home periodically. Maintaining workforce availability has become increasingly difficult as alternative employment opportunities emerge across sectors.

Shankar Raman acknowledged that many people now prefer jobs that offer more comfortable working environments compared to demanding construction work.

This has forced the company to rethink how projects are executed.

How Automation Is Changing Construction

One of the strongest themes from the discussion was automation.

Shankar Raman explained that Larsen & Toubro has been investing heavily in robotic welding, robotic painting and automated plastering systems. The company is working to shift more construction activity into factory environments through prefabrication and modular manufacturing.

He cited the Atal Setu bridge connecting Mumbai and Navi Mumbai as an example of extensive modular construction. Since labor deployment in the sea was challenging, modular fabrication became an important solution.

He also recalled the construction of the Statue of Unity, where thousands of copper skin components had to be precisely tracked and assembled using technology-driven processes.

His view is that the construction industry must transform far more rapidly than it has in the past. Automation is becoming essential not only because of labor constraints but also because of safety considerations.

Safety Remains a Core Priority

With hundreds of thousands of workers across sites, safety remains one of the company's biggest concerns.

Shankar Raman spoke candidly about the risks associated with large-scale construction projects and the importance of maintaining safety standards even during periods of intense activity.

He believes automation can help reduce unsafe work practices and improve consistency across projects.

He also pointed to China's experience with construction automation as an example of what can be achieved and suggested that India still has significant room for progress in this area.

The Search for India's Future Engineering Talent

The battle for engineering talent has become more competitive.

According to Shankar Raman, strategy firms, banks, investment banks, startups and technology companies all compete for the same pool of highly skilled graduates.

He noted that the number of graduates from the Indian Institutes of Technology joining the company is lower than it was in the past. As a result, Larsen & Toubro increasingly looks for talent beyond traditional recruitment pools.

The company focuses on identifying capable engineers from smaller towns and colleges, investing in their development and preparing them for larger responsibilities.

The critical challenge comes several years into an employee's career. As engineers grow professionally and personally, companies must provide meaningful work, challenging assignments and opportunities to contribute to future technologies.

Shankar Raman believes that if the company can retain employees through this stage, many will remain for the long term.

Why Research and Future Technologies Matter

To engage talented engineers, Larsen & Toubro is increasing its focus on areas that involve innovation and long-term development.

Defense research and development is one such area.

The company develops prototypes, demonstrates capabilities and works on projects that may take years before commercial orders materialize. Despite the long timelines, these programs provide engineers with opportunities to solve complex problems and contribute to future technologies.

Shankar Raman also highlighted semiconductor design as another area attracting engineering talent interested in building future capabilities.

He believes companies must create spaces where engineers can work on ideas that extend beyond day-to-day operational requirements.

Lessons Learned from the Middle East

The Middle East has become one of Larsen & Toubro's most important international markets.

Saudi Arabia, Qatar and the United Arab Emirates represent major opportunities for the company. Working in these markets has helped Larsen & Toubro become comfortable handling multi-billion-dollar projects and collaborating with global partners.

Shankar Raman said these partnerships have provided valuable exposure to international work practices, project management techniques and execution standards.

One observation stood out.

In the Middle East, project sponsors remain closely involved throughout execution. Their teams often work alongside contractors and actively participate in monitoring progress.

This creates better alignment, stronger communication and quicker decision-making.

He contrasted this with situations where contractors are expected to solve every challenge independently after a project is awarded.

He believes the collaborative approach seen in the Middle East improves execution, reduces risk and helps projects stay on schedule.

How a Finance Professional Works With Engineers

As Chief Financial Officer, Shankar Raman described his role as helping engineers see potential risks before they become problems.

He believes engineers appreciate financial discipline when it is paired with solutions.

Rather than simply identifying concerns, finance teams must also suggest practical ways forward. This creates trust and allows both sides to work toward shared objectives.

For Larsen & Toubro, the common objective is creating value for shareholders.

Every investment decision, capital allocation choice and business initiative is ultimately evaluated through that lens.

Investing for the Future While Protecting Shareholder Value

Shankar Raman spoke extensively about capital allocation and portfolio management.

He argued that strong balance sheets should be used productively rather than allowing excess cash to accumulate without purpose.

At the same time, investments must be approached carefully. Some will succeed quickly while others may take time to generate returns.

Where an investment requires patience, he is willing to wait. Where an investment has fundamentally failed, he believes companies must acknowledge mistakes and move on.

He also noted that Larsen & Toubro has recently completed a period focused on divestments and is entering a phase where investment will play a larger role.

Future-ready sectors and technologies are expected to receive greater attention in the years ahead.

What Atmanirbhar Bharat Means to Shankar Raman

For Shankar Raman, self-reliance means reducing vulnerability and building ownership of technology.

He believes India has become highly capable at using technology but must now focus more on creating foundational technologies.

His vision of an Atmanirbhar Bharat is one where India develops and owns proprietary technologies that become a source of national pride.

The Future of Larsen & Toubro

When asked what Larsen & Toubro could look like over the next five to ten years, Shankar Raman's answer was clear.

The company must become far more technology-led.

Engineering excellence will continue to matter, but technology will play a larger role across everything the company does.

He also identified the company's own ambitions as the biggest challenge. Achieving future goals will depend on attracting talented young Indians, keeping them engaged and creating opportunities that inspire them to build their careers within the organization.

For investors, his message was straightforward.

Larsen & Toubro is entering a new investment phase. Future investments may temporarily affect traditional financial metrics, but they are intended to prepare the company for the next stage of growth. He encouraged investors to focus on the quality of investments being made and the long-term value they can create.

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