An interview with Larsen & Toubro Director DK Sen
As part of our landmark study, Kanvic talks to Indian cement industry's leading figures to gain their unique perspectives on key strategic questions facing the sector.
- Interview |
- 01 June, 2019
Profile of a Leader:
- DK Sen has been Senior Executive Vice President of Infrastructure and Whole-Time Director at Larsen & Toubro Limited since October 2015.
- He has vast experience in Design and Engineering, Business Development, Tendering, and Construction.
- Sen holds additional responsibilities as Chairman on the boards of L&T Infrastructure Engineering Company and L&T Oman LLC and is also a member on the board of L&T Qatar LLC.
Kanvic: What is your current outlook for the engineering and construction industry over the next 10-15 years? How do you see the increase in demand for cement evolving particularly with regard to large cement intensive projects?
DK Sen: Around two to three years back, what happened very judiciously was that the Indian Government or the Ministry of Road Transport and Highways introduced concrete roads. Earlier it used to be bitumen roads. As we all know bitumen is not manufactured in India, it is an imported product and the price fluctuation for bitumen is huge and unanticipated. The road construction industry was having only asphalt paver, there was hardly any concrete paver because only the airports used the concrete paver and everywhere else we had the bitumen paver. Then suddenly the Ministry came up with a notification or a rule that the roads in the country mainly the high highways and expressways will be made out of concrete.
Then we were caught by the huge fight for production equipment but the good side was that they brought in price regulation for the cement which said that everybody must supply cement at that particular price. This made a lot of things workable for us even though we had to buy a lot of equipment because the price of concrete came down. The beauty of a concrete road is that once you make it, that doesn’t require repair, and you hardly have any maintenance cost. Whereas for Bitumen you have regular five years maintenance and overlay. Now every road is coming up with concrete pavement except for the service road which is smaller in nature but the main roads are all concrete.
Every year the government is coming up with Rs 2,00,000 crore worth of projects and if 50 percent of them are at least concrete, that makes huge business for the cement industry. Smart cities are also coming up with a similar concept of the main roads being made of concrete. Even though the load that they carry is very less as they are new cities and it takes a lot of time to raise the capacity, the idea is that the life-cycle cost would be much lesser because bitumen roads require repair. Going forward, other infrastructure projects like ports are going to be upgraded and new ports will be added - particularly Sagarmala project. A port requires a huge mass of concrete to make the whole infrastructure ready.
3D Precasting is also coming to India. It has just started in the USA and a lot of work is going on to conceptualise and actually make it a practical solution to manufacture concrete elements by precasting. It is like a printer where you give the drawing, you feed the concrete and the elements come out in the same shape, size, and finishing.
L&T has already taken up initiatives for future growth. We’ll be buying these printers. Today it is available in small capacity to make models, medical equipment, to make small parts but tomorrow it will be a large scene. So if that comes, then more and more inter-building will be forecasted and there will be more business in the cement industry.
In my opinion, cement is one-third the cost of steel so there is no way you can actually avoid making cement and we have a huge capacity of cement in the country. Frankly speaking, nobody is daring to add more capacity since the past four to five years. But the way cement is being used, the available capacity will be fully utilised and then people will look forward to putting more and more plants in the country because it is all for domestic consumption.
Kanvic: What can the construction industry do or the technological or engineering industries do to promote the consumption of cement?
DK Sen: Generally, those who make roads have to face the variation of soil. Soil somewhere is good for the construction and somewhere it is not so good. So we are using cement as a stabiliser in improving the bearing capacity of the soil. If I have a bad soil I am restricted on the capacity that can be built there. So if I have bad soil, I have a machine called a cement stabiliser which we import from outside, that runs along the road and mixes soil and it relays and compacts it in position. So that way there will be industrial use of cement which was not there before.
Also, today we are replacing steel wherever possible with concrete because it is cheaper in nature and its durability is also very good. So these are the few things for infrastructure one can think of. You know, the initiative of A Ramakrishna, whose aim was to replace steel everywhere with concrete, has paid us for all these years and we are upholding and going forward on how much can we replace steel with concrete as the iron ore stock is less. So if we use more and more cement because cement comes as a by-product from any other industry like the moment you have ash, you can convert it into cement.
Kanvic: Can the government do anything to take us to the level of China in terms of cement consumption?
DK Sen: China is doing bigger projects than India. Per capita consumption of cement is 1,000 to 1,500 kg in China while in India it is 200 kg. China has increased its manufacturing capacity by 10 times. Government initiatives should be there and make sure government subsidy is there and make sure there is an international market. China has larger roads that they require, larger infrastructure that they require and there is no land acquisition problem, there is no legal procedure as compared to India. So that way it’s difficult to become like China. India is next to China. Also, China’s GDP is not growing the way India’s GDP is growing.
Kanvic: From a customer’s perspective, do you see any threat or substitution to cement or concrete in the construction industry?
DK Sen: We take cement for granted as it is available at every nook and corner. Earlier red mortar was used which has been replaced by cement. I have no idea what can replace cement. Nothing has the same scalability or effectiveness as a material.
Kanvic: For the construction industry for the next 10 years, what are the upcoming trends?
DK Sen: I would say 3D Printing is a significant emerging trend. It is revolutionary in terms of design as well as being able to carefully measure material-qualities. The second is digitalisation. I believe 100 percent digitalisation is the only way to survive in the market. Another niche source of cement demand not many have considered is parking lots and parking spaces. These need to be built as they are in need currently as more and more cars are on the roads. Another key trend is urbanisation. Cities will need to be developed to accommodate more people as people come from villages and satellite towns.
Kanvic: From a construction industry point of view, how are you dealing with the issues of sustainability?
DK Sen: We don’t have the resources or money to invest in inventing new materials unless someone else comes with that. We can only make sure to be more economical with what we are using and we even try to use the old material and don’t throw as was done earlier. We make sure to minimise consumption and pollute less, develop villages, build community projects.
Kanvic: As one of the largest companies and the leader in this industry, do you have challenges in attracting talent?
DK Sen: Talent has become a problem because experienced people are scarce. A lot of people are coming from engineering colleges but it takes time to train them. A possible solution would be to hire expatriates. We take particular care in hiring foremen, they need to be very disciplined and dedicated and have knowledge about soil and all aspects regarding quality construction practices. We are currently trying to invest in a more mechanised process, which would reduce the need to attract such a quantity of individuals.
Kanvic: How do you see the cement industry adapting and responding to changing demands from construction and engineering companies in terms of product and service?
DK Sen: In terms of products, we haven’t found a product that will give better quality at the same cost. One area I think requires research is to improve the shelf-life of cement. It is 3 months presently but this can be a constraint when constructing large projects.