L&T looks to scale up modularisation to boost project execution

EPC major sees a $100-150 billion modularisation opportunity over five years as skilled labour shortages, high costs and remote locations pose execution challenges

Engineering, procurement and construction (EPC) major Larsen & Toubro (L&T) is looking to scale up its modularisation capabilities as it seeks to address challenges related to skilled labour shortages, high labour costs, extreme weather, and remote project locations.

 

The company is moving towards hybrid solutions, rather than treating conventional construction and modularisation as binary alternatives, said Subramanian Sarma, deputy managing director and president of L&T. “A very quick back-of-the-envelope assessment gives me that about $100 to 150 billion of market opportunity will be available for modularisation over the next five years or so,” he said.

 

Sarma was speaking at an event marking the completion of L&T’s modularisation project for Australia – Project CERES, where L&T completed the fabrication and delivery of 110 modules, weighing approximately 64,000 metric tonnes, for Australia’s largest urea manufacturing plant with a capacity of 2.3 million tonnes per annum. 

 

 

Modularisation involves fabricating and assembling components of a project off-site before transporting them to the project location, helping reduce on-site construction work and improve execution efficiency.

 

The Australian plant is being developed by Perdaman Chemicals & Fertilisers in Karratha, Western Australia, under the Saipem-Clough joint venture. L&T classified the order as ‘Significant’, valued at around Rs 1,000-2,500 crore.

 

L&T’s scope comprised 47 pre-assembled units and 63 pre-assembled racks, fabricated at the company’s modular fabrication facility at Kattupalli, near Chennai. 

 

L&T’s modularisation journey began around seven to eight years ago, chairman and managing director S N Subrahmanyan said. The company currently has three fabrication yards in Oman, Hazira in Gujarat and Kattupalli in Chennai, with combined fabrication capacity of about 200,000 tonnes.

 

Sarma said the three yards have sufficient capacity to undertake additional large modular projects. Of the 200,000-tonne combined capacity, even if half is allocated to L&T’s offshore business, about 100,000 tonnes would remain available for onshore modularisation, he said. This would allow roughly three projects of the scale of the Australian project to be undertaken concurrently.

 

The company is also looking at smaller modules that can be transported by road, particularly for domestic projects. Sarma said this would allow L&T to use modularisation selectively in projects where it could address labour requirements while remaining transportable.

 

“In India, we predominantly use it for our own use,” Sarma said, adding that the company wants to extend the application beyond hydrocarbons to areas such as steel and thermal power.

 

Globally, L&T sees opportunities in markets including Mozambique, Canada, Australia, and the US Gulf Coast, where remote locations, limited skilled workforce or high labour costs can make conventional construction more challenging.

 

Subrahmanyan said L&T currently employs about 400,000 workers at any given point but is facing a shortage of about 60,000 labourers. Sarma said labour availability and capability were industry-wide challenges and that modularisation could form part of the solution.

 

L&T has previously undertaken modular projects for customers including Linde in Singapore, Shell in the Netherlands, and Dangote in Nigeria, among others. Sarma said the successful Australian project would also help build customer confidence in L&T’s ability to execute large-scale modular projects from India.

 

L&T is also in discussions with the government on policy support for modularisation, said Sarma. He added that the company is in dialogue with the government and the Reserve Bank of India on credit-line facilities, concessional taxation for export projects, and export incentives. 

 

Further, L&T is also looking to expand its presence in data centres, with the company pursuing both EPC projects and its own data-centre development, said Sarma. “Our ambition is to set up at least 250 megawatts to 400 megawatts of data centre capacity in the near future,” he said.

 

On West Asia, Sarma said the region remained an important market for L&T, despite ongoing challenges. “The order booking in the Middle East was always good,” he said, adding that international order-book growth had been around 27 per cent in the first quarter of FY27. 

 

L&T is also pursuing opportunities in newer energy areas. Sarma said the company expects three or four coal gasification projects to emerge over the next two to three years and would pursue them.