Gulf Orders Return, Caution Remains

L&T’s West Asia Orders Offer Hope Engineering Firms, But With A Note Of Caution

By Amritha Pillay

What? 

Whether the US and Iran will reach a deal over the Strait of Hormuz is still not clear, but India’s engineering companies are beginning to see signs of revival. This is in a market that was threatened by the US-Iran conflict.

After a brief lag seen between March and May, project tendering and awards across West Asia are picking up; executives at companies including Larsen & Toubro Ltd and KEC International Ltd have said or reported new orders. 

The return of orders is being driven mostly by the resumption of projects that were already in the pipeline before the conflict. While reconstruction spending could also happen, they are still mostly at the discussion stage.

The immediate priority is therefore to get existing projects moving, secure new awards and resolve claims for higher costs and delays caused by the disruption.  

This is a reversal from April, when The Core reported that no major new contracts had been awarded by West Asian clients to Indian engineering companies since the conflict began in February. 

The easing of direct attacks, a return to more normal economic activity across much of the region, and continued government spending on infrastructure have since helped restore some momentum.

India’s largest engineering firm L&T has provided the clearest signal yet on this revival. On August 4, the company announced an order worth more than Rs 15,000 crore from Abu Dhabi National Oil Co. for the development of multiple offshore hydrocarbon facilities. 

The award followed a Rs 5,000 crore to Rs 10,000 crore contract from Kuwait Oil Co. announced in late July. KEC and KPIL have also secured new West Asian orders in recent months.

The rebound, however, is not uniform. Industry executives point to three trends — tendering is approaching pre-conflict levels; reconstruction discussions are beginning but remain preliminary; and companies are negotiating with clients over cost and time overruns on projects disrupted by the war.

Why? 

It is early days to either confirm a reconstruction order from West Asia, or to quantify prospects. 

Executives are careful not to overstate it and said this was the start of early discussions. 

L&T’s Shankar Raman said on the media call, describing discussions around reconstruction, “They have not yet zeroed in on the scope precisely for us to be able to quantify.”

KEC is seeing some early inquiries around the rehabilitation of transmission infrastructure and other critical utilities. 

“We are also seeing early discussions around alternative trade and logistics corridors, including oil & gas pipeline infrastructure, aimed at reducing reliance on the Strait of Hormuz. However, these opportunities remain at an early stage and are expected to take time to materialise,” Kejriwal said. 

What Next? 

For Indian engineering companies, the most immediate financial question is what happens to the projects already under construction.

Before the US attacked Iran in February, Indian engineering firms already had more than Rs 3 trillion worth of exposure, in the form of under-implementation projects in West Asia. 

Large engineering contracts usually contain provisions allowing contractors to seek compensation for certain cost increases and delays. 

The conflict disrupted logistics and supply chains, potentially raising the cost of executing projects that were already underway.

The companies are now negotiating those claims with clients.

“Wherever there have been project-specific impacts arising from logistics or supply chain disruptions, these are being actively discussed with the clients,” Kejriwal said. 

For now, the West Asian market appears to be moving back toward business as usual, but not yet back to where it would have been without the conflict.

Despite the early signs of momentum in ordering activity, industry executives still generously use ‘ wait and watch’ in their guidance.

The next phase for Indian engineering companies will depend on three big factors.

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Home furniture brand Blu Dot blew up on CTV with help from Roku Ads Manager. Here’s how:

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4.45%

That's India's retail inflation rate in July, up marginally from 4.38% in June, driven by rising food prices, according to data released by MoSPI using the new CPI series with 2024 as the base year.

By the Numbers: Food inflation (CFPI) rose to 5.52% from 5.32% in June. Ginger prices rose 83.62% year-on-year, garlic 35.36%, and onion 22.54%, while potato prices fell 16.56%.

Rural inflation stood at 4.84%, higher than urban inflation at 3.96%.

Restaurants and accommodation inflation was 7.72%, personal care and miscellaneous services 14.77%, and silver jewellery recorded the highest individual item inflation at 109.84%, though down from 133.24% in June.

Fast Facts: Telangana recorded the highest inflation among larger states at 6.32%, followed by Andhra Pradesh at 5.72%, Tamil Nadu at 5.44%, Madhya Pradesh at 4.91% and Karnataka at 4.89%.

Delhi recorded 2.68%, Maharashtra 4.09%, Uttar Pradesh 4.74% and West Bengal 3.89%.

Inflation rose steadily from 2.75% in January to 4.38% in June, before edging up further in July, with food prices consistently the main driver of the increase.

“Uneven monsoon conditions continue to cloud the food inflation outlook, although the relationship between rainfall and food prices has weakened in recent years due to active government intervention in food markets during episodes of price spikes,” said Dipti Deshpande, senior director and principal economist, Crisil said in a note on Wednesday.

Tata Chairman Resigns Amid Rift

N Chandrasekaran, chairman of Tata Sons, has said he will not seek reappointment when his term ends in February 2027, citing insufficient board support after months of friction with Tata Trusts, the charitable trust that holds 66% of Tata Sons. The disagreements reportedly centred on a possible listing of Tata Sons, mounting losses at Air India, and the planned exit of a minority shareholder.

Overview: The news triggered a sharp sell-off across Tata Group's listed firms. TCS, where Chandrasekaran spent his career before becoming group chairman in 2017, fell over 5%, while Tata Motors, Tata Steel, and Titan also declined. Analysts described the reaction as a knee-jerk response, noting the conglomerate has weathered leadership transitions before.

Setting: Chandrasekaran's eight-year tenure saw major acquisitions and rising profits, though divisions like Air India, JLR, and e-commerce faced setbacks. His exit adds fresh uncertainty for the 158-year-old, $185-billion conglomerate.

Godrej Consumer Shares Sink on CEO Exit

Godrej Consumer Products saw its worst day in six years as shares plunged 11% on Wednesday, after CEO Sudhir Sitapati's abrupt exit fuelled concerns over strategic execution at the FMCG company, Reuters reported.

Fast Facts: The company held a call in the evening but gave no reason for the exit, saying it was a matter between the board and Sitapati. He resigned just three months after being reappointed for a five-year term.

The stock hit a three-year low, closing at Rs 910, and was the top loser on the FMCG index, which fell 0.7%.

Aasif Malbari takes over, having joined as CFO in 2023. He brings over three decades of experience across consumer goods and auto sectors, including roles at Hindustan Unilever and Tata Motors.

“FMCG leadership is usually sales/marketing-driven, though there's precedent for finance heads becoming CEOs. We have to wait and watch how things progress under him but its positive”, Anand Rathi, Equity Research with Anand Rathi Group, told The Core.

Forecast: HSBC downgraded the stock to "hold," cutting its target to Rs1,120 from Rs1,260. Goldman Sachs and Nomura retained "buy" ratings but lowered their targets.

Analysts said execution, particularly of Godrej's Vision 2040 strategy, is now the key focus.

Pharma Push

India’s pharmaceutical exports rose 6.8% year-on-year to $8.1 billion in the first quarter of FY27, according to data by the Pharmaceuticals Export Promotion Council of India (Pharmexcil). The growth comes even as Indian drugmakers face uncertainty over US trade policy.

By the Numbers: Vaccine exports jumped 35.7%, while shipments of bulk drugs and intermediates rose 13.8%. Drug formulations and biologicals accounted for nearly three-fourths of total exports. The US remained India’s largest market, taking $2.5 billion, or about 31% of exports, followed by Europe, Africa and Latin America.

The Lead: The strong quarter comes as the US threatens to reshape India’s biggest pharma export market. US President Donald Trump has proposed keeping tariffs on imported generic medicines at zero for two years, before raising them to 100% in August 2028 and 200% a year later. India exported $9.7 billion of pharmaceuticals to the US in 2025, leaving the industry particularly exposed to any new duties.

India Fuels Russia's Shortage

Russia has begun importing gasoline from India for the first time, as Ukrainian drone strikes on its refineries trigger severe domestic fuel shortages. The first shipment, sourced from Rosneft-backed Nayara Energy's Vadinar refinery, arrived August 5 via a chain of sanctioned tankers using ship-to-ship transfers off Egypt's Damietta port, Bloomberg reported.

The Lead: Analysts say the roundabout route underscores the severity of Russia's gasoline crunch, as intensified Ukrainian strikes have pushed crude-processing rates roughly a third below seasonal norms. Moscow has banned fuel exports to prioritise domestic supply, even as it now imports from India and Belarus.

Pivot: More cargoes may follow, with additional tankers tracked conducting similar transfers, though final destinations remain unconfirmed.

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What Should Tata Group Company Shareholders Be Looking Out For?

On Episode 946 of The Core Report, financial journalist Govindraj Ethiraj talks to Hetal Dalal, COO at Institutional Investor Advisory Services (IiAS), as well as Amit Purohit, FMCG Analyst at Elara Securities.

• Tata Sons Chairman N Chandrasekaran Resigns, Group Stock Prices Fall

• Higher Food Prices Push Up Inflation To 4.45%

• Russia Is Importing Petroleum Products From India As Ukraine Steps Up Bombing Of Its Refineries

• What Should Tata Group Company Shareholders Be Looking Out For And Should They Be Concerned? 

• A CEO Resignation At Godrej Highlights The Larger Challenges In India’s Consumer Products Market