K Venkatarmanan, CEO & MD, L&T, has helped transform the company through his visionary leadership | By Indira Rao | Passion and an effective strategy make a heady combination. Add vision to that and you have the perfect recipe for success.Having a vision is more important than anything else in a business and for a business visionary it is the ability to dream big and then turn it into reality.
I remember, a couple of years ago when I was talking to nuclear industry veteran Baldev Raj,president, Indian National Academy of Engineering:he had mentioned that today’s vision is not of the likes of Homi Bhabha or Vikram Sarabhai or any of such stalwarts. He had said, today, one does not get inspired and that India needs true visionaries who can lead the country to excel in the field of manufacturing. He had also mentioned he had complete faith that India would create such visionaries and leaders.
Imagine my delight when I did come across somebody that fits that description to the ‘T’. K Venkataramanan, CEO & MD, Larsen & Toubro (L&T), is one such true Indian visionary who through his exceptional focus, passion, strength and of course the support of his seniors, inspired his team to not only reach organisational goals but also created new chapters in the history of his company.
Having been associated with L&T since four decades under various roles, Venkataramanan has witnessed the numerous technological changes that this conglomerate has seen over the years.Reminiscing his earlier days at the company, he professed, “When I joined L&T we were made to work ‘hands on’ at the shopfloor. That, I think,made all the difference in nurturing fresh IIT graduates like us. During 1968-69, companies did not bring production engineering to the shopfloor level but the earlier founders of L&T had a vision to groom competent young people and train them in the higher end of manufacturing. And that is exactly what they did with me too.
“I started off in the company in carbon steel and never went into structural fabrications a tall. Within two years, I was working on pressure vessels, heat exchangers and then stainless steel.Within five years we went into nuclear and aerospace.Thus, from my own eyes, I have seen the company getting their first job with Lloyds register of shipping classifications, ASME jobs, and then going from lower pressures to higher pressures,simple metallurgy to much more sophisticated forms of metallurgy.”
L&T has been very strong in its metallurgy range right from their early days. Since the very beginning they used to not only handle carbon, stainless and alloy steel but thanks to their very early entry into space they also started to handle very difficult to weld and very high mechanical properties of steels like aluminum and titanium.
Welding engineering is a highly skilled procedure and is the backbone of high-end manufacturing especially in the capital equipment, which is what L&T is known for. Hence, understanding metallurgy formed the core of the company. Agreeing Venkataramanan added, “In those early days itself we got the ASME stamp. I must say that we were one of those few lucky boys who came in the mid sixties to really become a part and see this transformation of the company from fabrication, machining and welding through fixturing, stress relieving and then getting into the laboratory to understand how materials behave during heat treatment.”
The period that Venkataramanan talks of was also the time when India was on her drive to become self-reliant. “So any technical collaboration that was undertaken was to be made sure that it was valid for that particular time period,of say 5-10 years. Post that one should have had the capability to be on one’s own.
Hence, many of us were sent abroad with a clear mandate to understand design and manufacturing technology well, so that we could come back and were in aposition to implement it and stand on our own.” One of the advantages of going abroad was getting exposure to things that were not prevalent in India. “Hence, my aim as soon as I came back was to attack those areas which we were not well versed with and set up these facilities,” mentioned Venkataramanan. Thus, came about setting up an R&D centre of which he was one of the founders.
Elucidating on the same, he said, “The R&D centre was started in 1973 and we had to focus on all sides – mechanical, metallurgical,process chemical engineering and heat transfer. Those days it was very difficult to get computer programmes and we had to go through a class textbook kind of approach to build our own programmes.”The R&D centre concentrated on stress and vibration analysis, rotating machinery designs, high speed rotating machines and unit operation. Then they setup laboratory facilities for heat transfer, mass transfer studies and drying. There were also pilot plants where they could try out spray drying,evaporation and specialisation in heat transfer. “Thus, we created a sort of where withal back up to be able to do our own developmental work at that time. Much later we moved further up and while I was still in R&D, I steered our initial thrust into defence in 1982- 83,” affirmed Venkataramanan.
After growing in the R&D department,Venkataramanan was moved to the workshop again. During this term, as the project manager, he helped A M Naik, group executive chairman, Larsen & Toubro, to setup the Hazira Works. However, getting business in 1985-86, when they set this up, was proving to be difficult as India was not moving very fast. With L&T taking gigantic steps to progress viz. suddenly moving from manufacturing equipment of thicknesses of 80-90 mm to 200-250 mm running the business was proving to be a little difficult.
combat this, again with the support of Naik, they opened three more business areas – hydrocarbon upstream (offshore),gas based power plants and defence. “We did not have an industrial license for coal based power plants and hence we had to get into gas based power plants,” averred Venkataramanan. “However, simultaneously we did small captive coal based plants for our own cement plants. All of these developments were possible only because the seniors at L&T, especially those in manufacturing, came with a fair amount of depth of knowledge and knew where they wanted to take the company.”
Indigenisation has been the ethos since the time foreign nationals used to be on the board of the company. “One of our expat seniors who was incharge of the switch gear department at Powai, once said a beautiful thing that has remained with me till now. He said, ‘If it can be made in Denmark then why not in India?’ And that is how when I had joined the company there was already an established R&D team in switch gear. Thus,they were not just importing the products from Denmark but developing it here. This ethos of wanting to getting into know how and creating opportunities to learn, ideate,is what drove the company since the very beginning.”
While today the Indian talent is being recognised by one and all it is indeed interesting to note that as early as the 1970s,the L&T management recognised, appreciated and encouraged Indian talent. This is quite evident from the growth that Venkataramanan had in the company.As stated above he was instrumental in starting quite a few initiatives and was also one of the early birds who contributed to good high quality engineering, especially in the process chemical plants segment.
This included right from initiating unit operations to escalating from smaller to much larger projects in a short span of time. “I cannot take credit for this all on my own,” emphasised Venkataramanan.“This was all a result of team work and in acompany, such as ours, nobody can claim to have done everything single handedly.”
However humble, one cannot deny his personal contribution to the organisation especially in terms of being one of the founder members in L&T to start the concept of project management. “Project management is still growing and not very well established in India, though it is the most important discipline as it encompasses everything from engineering to construction. Driving this area in my organisation is gratifying.”
Being a ‘people person’ is also what adds to his charm and makes him so loved in the organisation.Even through his busy schedule, if there comes an opportunity to talk to young sters and encourage engineers he makes it a point to be with them, if he can. “To grow on the project business side we have initiated a concept called Real Time Strategic Change Process (RTSC) where we try to get a large number of people, in a particular format of‘microcosm’. A microcosm is where everyone irrespective of age, discipline and hierarchy come together on one platform to drive the vision and mission of the company. These interactive sessions have generated mind boggling ideas that have been instrumental in transforming our organisation year-on year,”said Venkataramanan.
The L&T leadership also consciously strives to inspire a culture of creative thinking and enables the institutionalisation of innovation. Way back in 2005 they started a Non-Monetary Recognition (NMR) scheme and slowly graduated to a level that enabled them to institutionalise the culture of innovation.
“The scheme was christened as ICONS (an acronym for Immense Contribution of Noteworthy Significance) in 2008 and recognises excellence in various facets of our business. To democratise and inculcate the culture of innovation, the scheme primarily focuses on younger colleagues having up to 15 years of experience,” explained Venkataramanan.
Indigenisation cannot come without innovation and L&T tops the list when it comes to both. “In our company, everything starts with an E and D – Engineering and Design. Though the value of this maybe only 7-8% of the total cost of the chain,it controls the 50-60% of the economics of that chain. Design is like the head,” puts in Venkataramanan.
He said that L&T never went into manufacturing for manufacturing sake. “Very early we had set up the design department and later on the R&D got into the finer parts of manufacturing. Today, we have 11 registered R&D centres and though percentage wise we are above the benchmark what matters to us is not how much is spent on it but the result it brings out,”asserted Venkataramanan.
In strategic sectors, L&T has made significant contributions to Indian defence,nuclear and space program viz. Arihant Nuclear submarine, Bramhos, Fast Breeder Reactor, Mars Mangalyaan mission. Currently,it is manufacturing the biggest fusion reactor component – Cryost at for ITER program. This 500 M We reactor is a second largest joint research program of seven leading countries USA, Japan, EU, Russia, China,Korea and India.
The company under Venkataramanan’s leadership also recently bagged a very prestigious $450 million deal in the Middle East from ADMA-OPCO, a subsidiary of ADNOC and a major producer of oil and gas. This was for carrying out the job of engineering,procurement, construction and installation(EPCI) of four wellhead platforms and a manifold tower platform, among others.
“We did this as a part of our vision. To be active on a long term sustainable basis in the GCC region it was only wise to have a manufacturing facility in that part of the world. Therefore, after doing a lot of work between Qatar, Saudi Arabia and so on, we finally got an opportunity to set up an inhouse engineering, fabrication facility at Sohar,(Oman), where they were already building a large port along with the Rotterdam port authorities,” avowed Venkataramanan.
Oman ministries liked the idea of having a manufacturing facility along with a port. Hence, they gave L&T a long lease and built the break waters, key walls, as per their specifications. “Where such projects were usually bagged by domestic companies in UAE we came along and clinched the deal. This was a large job with five platforms,jackets, lots of pipelines and a lot of brown field work. But once in a while when something like this happens it acts as a confidence booster like no other,” declared an enthusiastic Venkataramanan.
L&T is one of the few contractors in the world with complete in-house engineering,procurement, fabrication and installation capabilities in the hydrocarbon sector. And as recent as last year the company re-organised its hydrocarbon business as a separate subsidiary, named, L&T Hydrocarbon Engineering (LTHE).
Elaborating on this, Venkataramanan stated, “L&T is a highly verticalised company.Guided by AM Naik we created different verticals as the company was growing too big and each industry sector needed to have a focus. We then wanted to see which of these verticals had more of an international and Indian potential. Thus, we realised that infrastructure, hydrocarbon, power transmission and distribution had more of an international focus than coal based power plants, which was more Indian. Also, this strategy has led to creating new leaders within the organisation as each subsidiary is poised to be listed separately.”
The company also as an international cell dedicated to exports for every vertical. “The first cell was started way back in 1980 because we started exporting process equipment from those days. From 1990 onwards it became a much larger group and over the last eight years or so it has become one of our major activities in the process plant equipment,” averred Venkataramanan.
He further added, “We export 50% of the equipment we make and overall as a company we export 30%. We are now looking at scaling it up much faster.”Having been instrumental in transforming L&T from a fabrication-driven EPC contractor to a technology led player, Venkataramanan opined that going forward L&T is going to hit a very sweet spot in the next 10 years. “We have always been a barometer and a bellwether of the Indian growth story.
We had a self reliant India, which helped us grow in those years and now there is a great globalised India with a strong emphasis on value added manufacturing, which can take manufacturing sector’s contribution to GDP from 17% to 25%. I believe that along with India L&T too should have golden period over the next 10 years.”