Syria’s jihadi migration emerges as top terror threat in Europe, beyond

Western support for the opposition in Syria's bloody civil war raises fears of a blowback from the European extremists who've flocked to new land of jihad

MADRID — Rachid Wahbi came to Syria from a Spanish slum, rushing toward death.

And he didn’t plan to die alone.

Facing a camera hours before the end, the bearded, 33-year-old cabdriver wore a black headdress and a black flak vest and held an AK-47 rifle. He spoke in hesitant classical Arabic with a north Moroccan accent. He said he had studied his target and, God willing, his action would end in triumph. He wished the glory of martyrdom for his fellow fighters in the al-Nusrah Front, al-Qaida’s Syrian branch.

When the cameraman asked about his mother, the Spaniard became emotional.

“I want to thank my mother because she inspired me,” Wahbi said, according to a translation by the Spanish national police. “Mother, you must be happy because God will reward you.”

The al-Nusrah propaganda video shows Wahbi disguised in the helmet and uniform of a Syrian soldier as he hugs a comrade and climbs into a truck packed with explosives. The truck bears down on an army outpost. An explosion thunders. A column of smoke, seen from multiple camera angles, climbs toward the sky.

Wahbi killed 130 people in that suicide bombing on the al-Nairab military base in northern Syria on June 1 of last year, according to Spanish authorities. And the numbers get grimmer.

Five holy warriors from Spain have died in Syria, three in bombings that killed another 100 people, police say. Last month, Spanish police stormed the hillside ghetto where Wahbi lived in Ceuta, a Spanish territory in North Africa, and arrested a ring of extremists who are charged with sending as many as 50 fighters to Syria. Indicating a threat much closer to home, the accused leader had previously been acquitted of plotting attacks on targets in Spain with a group linked to al-Qaida and a former Guantanamo inmate.

“The global jihad has prioritized the Syrian conflict as its principal front,” said a top Spanish intelligence official who requested anonymity because of the continuing investigation.
“And it has directed its subsidiaries to move combatants to the zone. What worries us is that this experience could serve as preparation, as training to return to European countries and carry out attacks at home.”

Hundreds of Europeans and thousands of other Sunni Muslim foreign fighters have made Syria the new land of jihad. The migration complicates an already delicate calculus in Washington and in European capitals that are aiding the fractious rebel coalition in Syria. European security chiefs see the flow of extremists to and from Syria as their top terrorist threat. It also raises concerns that European militants radicalized by or returning from the Syrian conflict could strike U.S. targets overseas or travel across the Atlantic.

“Imagine this: Between 2001 and 2010, we identified 50 jihadists who went from France to Afghanistan,” said a senior French counterterror official who also requested anonymity. “Surely there were more, but we identified 50. With Syria, in one year, we have already identified 135. It has been very fast and strong.”

The statistics are even stronger in adjoining Belgium, one-sixth the size of France. Between 100 and 300 jihadis have journeyed from Belgium’s extremist enclaves to Syria, according to a veteran Belgian counterterror official. Other significant fighting contingents represent Britain, Denmark, the Netherlands, Canada, Central Asia, Libya, Tunisia and Saudi Arabia. The senior French official estimated the total number of Europeans to be at least 400. Others say it could be double that, but counterterror officials warn that precise numbers are difficult to establish.

The foreign fighter phenomenon in Syria “is one of the things that most worries a number of European government agencies,” Italian Defense Minister Mario Mauro said in an interview. “But this is also within the reactive capacity of a system built by democracies, therefore based not on preventive arrests but on monitoring and intelligence activity to prevent situations like this from degenerating.”

The total number of the rebel forces – Syrians and foreigners, full-time and occasional fighters – is thought to be in the tens of thousands. Estimates range from above 60,000 to below 100,000, based on interviews with U.S. and European officials and experts.

A recent private report examines the role of Sunni foreign fighters who have converged from across the Muslim world to battle the regime of Bashir Assad and his powerful Shiite allies, Hezbollah and Iran. Foreign fighters account for up to 10 percent of the rebels in the data sample examined by the study, which relies on sources including online obituaries of militants and social networks and is titled “Convoy of Martyrs in the Levant.”

Released last month by Flashpoint Partners, a New York security contracting firm, and the Washington Institute for Near East Policy, a think tank that tends to align with Israeli views, the report compares the conflict to previous arenas that attracted extremists: Afghanistan, Pakistan, Iraq, Yemen.

“At the very least, the current war in Syria can be considered the third-largest foreign mujahideen mobilization since the early 1980s — falling short only of Afghanistan in the 1980s and Iraq during the last decade,” the study concludes. “[T]he mobilization has been stunningly rapid — what took six years to build in Iraq at the height of the U.S. occupation may have accumulated inside Syria in less than half that time.”

Syria is familiar turf that once served as a hub for militants en route to fight in Iraq. It is closer and more accessible to Europe than other jihadi destinations: Militants travel by air or land to Turkey, where smugglers sneak them across the border. There is little interference by authorities in Turkey, a major sponsor of the Syrian rebels.

Despite the ferocity of the civil war, Syrian cities offer better living conditions to foreign volunteers than al-Qaida’s remote compounds in Pakistan or the impoverished wastes where Islamists operate in Somalia and Mali. The ever-improving technology of the Internet and mobile phones allow combatants to trumpet their exploits and remain in close communication with comrades back home.

“There are guys who regularly update their Facebook pages from Syria,” said Claudio Galzerano, the chief of the international terrorism unit of the Italian police in Rome.

Moreover, the cause enjoys unique popularity. Many Sunnis and non-Muslims alike regard it as a crusade to overthrow a brutal dictator who uses chemical weapons to slaughter his people. The Obama administration and European governments support the Syrian opposition and the Supreme Military Command, which encompasses the Free Syrian Army and other relatively moderate groups. The Convoy of Martyrs study describes “Arab Spring-motivated, pro-democratic revolutionary fervor” that pushes foreign volunteers to join the Free Syrian Army, rather than extremist rebel units.

Nonetheless, secular idealists are a minority among the foreign fighters, according to European counterterror officials. The octopus-like embrace of anti-Western, al Qaida-connected networks in Europe and the Muslim world— sometimes led by the same chiefs as in past conflicts — has shifted to Syria. Many foreign recruits join al-Nusrah or the Islamic State of Iraq, al Qaida allies that field some of the toughest fighters. These Sunni Islamist groups clash with other rebel factions and argue among themselves about whether to widen their jihad beyond the borders of Syria, according to counterterror officials.

European police fear that well-trained, battle-hardened veterans will return from Syria and, on their own or acting on orders from terrorist bosses, decide to continue the war. Western leaders say they are taking pains to prevent stepped-up aid to the Syrian opposition from reinforcing the extremists. When the European Union ended an arms embargo to the rebels in May, reluctance about that decision resulted partly from concerns that the weapons would end up in the wrong hands.

“There is a risk, and how,” said Stefano Dambruoso, an Italian parliamentary deputy who is a former top anti-terror prosecutor. “In a situation that is out of control like the one in Syria, it is really very dangerous. Italy supported maintaining the embargo because really we don’t know who we are dealing with. The rebels are still not clearly identifiable.”

Dambruoso knows the treacherous turf. Based in Milan in the early 2000s, he led prosecutions of al Qaida operatives involved in plots in Europe and linked to the assassination of Ahmed Shah Massoud, a legendary anti-Taliban commander in Afghanistan, just two days before the 9/11 attacks on New York.

Several cases in Italy involved the Tunisian Combatant Group, part of al Qaida’s terrorist coalition. Some Italian cells sent recruits via Syria to join the insurgency in Iraq. Key operatives were arrested by Italian police and then deported to prisons in Tunisia, sometimes after serving time in Italy.

After the Tunisian revolution ended in 2011, however, a new government in Tunis released convicted terrorists and allowed them to create a radical Islamic party, Ansar al Sharia. It is led by Seifallah Ben Hassine, who is a founder of the Tunisian Combatant Group and a former ally of Osama bin Laden, according to European and UN counterterror officials and documents. His party has been recruiting and deploying holy warriors to the Syrian front from camps in the south of Tunisia, according to European investigators.

Tunisians account for 16 percent of foreign fighters in Syria, the second-largest group there, according to the data sample in the Convoy of Martyrs Study.

“This is one of our top concerns,” said Galzerano, the Italian police commander. “They are sending a lot of Tunisians to Syria. Everyone is welcomed by the rebels, including those who have little skills or experience.”

Syria holds another attraction for aspiring holy warriors: It serves as a refuge from law enforcement. Some Europeans in Syria are seen as active threats to their homelands. An illustrative case began last September when someone threw a hand grenade at a kosher grocery store in a suburb north of Paris, wounding one person. Traces of DNA on the grenade led French investigators to a known Islamic radical and revealed a dangerous network operating in three cities.

When a police tactical team raided the Strasbourg apartment of the suspected leader, a Muslim convert of French-Caribbean descent, he opened fire and died in the ensuing shootout, authorities said. Police made a dozen arrests and discovered a garaged stockpile of explosives, including pressure-cooker bombs like those used in the Boston Marathon attack.

“We learned they were planning a campaign of attacks, including car bombs,” said the senior French counterterror official. “They wanted to launch the attacks, then flee to Syria and fight there. Three of them were able to escape to Syria.”

The three suspects who fled the French manhunt joined the al-Nusrah front. One has been badly wounded in combat against the Syrian military, according to the French counterterror official.

Western investigators track the communications and travels of foreign fighters because of their proven capacity for violence and potential contact with al Qaida and its affiliates, who hate the West as much as they hate Assad, investigators say.

“We hear threatening rhetoric in the intercepts,” a European police commander said.

The presence of a minority of hardcore Islamic terrorists in the insurgency poses a conundrum when it comes to Western intervention. One school of thought urges restraint in order to avoid creating a monster comparable to the U.S.-backed Islamists who fought the Soviets in Afghanistan in the 1980s and then morphed into al Qaida. Others, in contrast, believe the West could influence the Syrian rebel movement by doing more.

A former CIA counterterror chief leans in the latter direction. Author Charles (Sam) Faddis served in South Asia and the Middle East, where he led clandestine CIA operations in Iraq that preceded the U.S. invasion in 2003. He communicates periodically with leaders of the Free Syrian Army and thinks the Western support is “too little, too late.”

“I’m the first guy who parts company with the neo-cons (neo-conservative Republicans in Washington) who think we should get involved everywhere,” Faddis said. “I’m against putting American troops in there, and I’m against a no-fly zone. But our approach has been short-sighted.”

There is a real threat of a blowback against the West even from a relatively small number of trained, combat-hardened veterans of the conflict, Faddis said. But he criticizes the Obama administration for not having moved quickly to provide arms and intelligence to the Free Syrian Army.

“You were going to have extremists flocking in there anyway,” he said. “Now you’ve increased their influence. Their power has been enhanced by our not getting involved in a more significant way. We need to get on the ground, map the terrain, figure out who we can work with.”

Last month, President Obama authorized providing small arms and training to Syrian rebels to augment nonlethal aid that they already receive. The U.S. government is working hard to support the pro-democracy forces and thwart al-Nusrah, which the U.S. designated as a terrorist group last year, and other extremist groups, State Department officials say.

“We remain deeply concerned by the violent extremism there,” said a State Department official who requested anonymity because he is not authorized to speak publicly. “We distinguish between those in the opposition seeking a moderate, democratic Syria and those who are trying to hijack it. We make clear with the armed opposition leaders who don’t espouse these [extremist] ideals the importance of isolating the extremists, so it doesn’t take root in the future Syria they are trying to fight for.”

The U.S. has committed $250 million in nonlethal assistance to the rebels and $815 million in humanitarian aid to those affected by the conflict, according to a State Department fact sheet. In areas of Syria under rebel control, the U.S. attempts to shore up the democratic opposition by helping local governments deliver security and other essential services, providing material such as trucks, communications equipment and computers. U.S. officials put the recipients through a vetting process intended to prevent aid from going to the extremists, the State Department official said.

“It’s important that the vetting is in place precisely because there are groups like al-Nusrah trying to intercept things,” the official said. “Sometimes there’s a delay as a result.”

In Europe, authorities have a hard time identifying and prosecuting suspected jihadis for terrorist activity when they return from Syria. Some known extremists insist they fought in the Free Syrian Army, which they indignantly point out has the backing of President Obama, French President François Hollande and others. Judges are more skeptical of the prosecutions than they were with defendants returning from Afghanistan or Iraq, counterterror officials say.

Courts in Europe often struggle to find enough evidence to lock up Islamic extremists if their alleged crimes center on ideological activity or combat in foreign countries.

Raphael Gendron is an example. In late 2008, Italian police arrested Gendron, a Frenchman residing in Belgium, and Bassam Ayachi, a Syrian-Belgian imam, in a camping vehicle coming off a ferry from Greece in Bari, a city at the heel of the Italian boot. Police discovered five illegal immigrants and a trove of jihadi propaganda in the vehicle.

In 2006, Gendron had been convicted of a charge of inciting hate and violence against Jews with Internet propaganda in Belgium. Ayachi had performed the marriage in Brussels of the Tunisian suicide bomber who later killed Massoud in Afghanistan, investigators say. Both had longtime ties to networks that had been implicated in terror plots and had sent jihadis to Bosnia, Afghanistan, Pakistan and Iraq, according to investigators and Italian court documents.

An Italian court convicted the duo of acting as recruiters and operatives for al Qaida, but an appellate panel freed them last year. Soon Gendron went to Syria to join a rebel battalion commanded by Ayachi’s son, a veteran of the Belgian military, according to Belgian investigators. In April, the 37-year-old Gendron died in combat near Homs, Syria.

Most suspects in past al Qaida-related terrorist plots against the West traveled first to jihadi combat theaters, and many were European or spent time in Europe. The combat zones and training venues of Pakistan and Afghanistan generated a stream of militants intent on striking the West — from the Sept. 11 hijackers to the failed Times Square bomber in 2010.

Fears of massive blowback against Western nations from Iraq did not materialize, however.
The Iraqi conflict certainly played a role in radicalization. But some European jihadis who returned from Iraq told investigators that, despite their eagerness to fight in a war zone, they would not commit violence against civilians at home.

The background of foreign volunteers determines the reception they get from Syrian extremist groups, investigators say.

“We see a little of everything in the profile of the recruits,” the top Spanish intelligence official said. “There are people who are clearly with al Qaida, or are associates of its subsidiaries. Then there are people who have no connection with anything. Solitary actors inspired to go to there and fight.”

Militants with useful skills, such as medical professionals or computer experts, are kept out of combat and given support roles. Men with military experience deploy in front-line units.

Those with little to offer quickly become human bombs.  

Wahbi, the Spanish suicide attacker, died soon after his arrival in Syria. He had no criminal record. Also known as Rachid Mohamed, he had supported his wife and children driving a white Mercedes taxi in Ceuta, one of two Spanish cities on the Moroccan coast. His predominantly Muslim neighborhood, known as El Principe, resembles a Brazilian favela or a North African casbah: The slum sprawls over a canyon near the Moroccan border and serves as a fortress for organized crime and Islamic extremism.

In 2006, 300 Spanish police officers raided El Principe, a show of force planned for the rough topography and hostility to law enforcement. Police rounded up 11 suspects accused of belonging to an al Qaida-linked group that allegedly plotted to attack a military base and a fairground in Ceuta and discussed joining the jihad in Iraq or Afghanistan. The suspects included an accused ideologue known as “Marquitos” and two brothers of a Spaniard once imprisoned in the U.S. base at Guantanamo Bay, Cuba.

However, the prosecution ran into problems with turning intelligence into evidence and presenting the testimony of two protected witnesses. The trial ended last year in acquittals. There were cries in the media and Muslim community that innocent men had been railroaded.

Spanish prosecutors now have filed an indictment alleging that the accused ideologue never relinquished his command role in Ceuta’s Islamic underworld. After war broke out in Syria in 2011, Marquitos allegedly recruited men from Ceuta and neighboring Morocco to join the new jihad, according to Spanish intelligence officials.

The taxi driver and two friends were among the first recruits. They departed in April of last year, flying via Malaga and Madrid to Istanbul, where smugglers helped them enter Syria and join al-Nusrah.

“They were in Syria very few days,” Wahbi’s widow, Sanaa, told El País newspaper last year. “Maybe not even a week. During the trip, which lasted a month and a half, he communicated with us by Messenger (internet chat). They were in Turkey quite a while because it seems they couldn’t reach Damascus. When they arrived in Syria he called us, but he didn’t give us details of what he was doing.”

Wahbi’s attack stands out as one of the war’s deadliest. Police say the ring in Ceuta sent at least 20 and up to 50 recruits along the same route or via Morocco. The sophisticated operation paid for travel and provided funds to widows and children of fallen fighters. Police are still trying to determine if the financing came from the criminal activity such as the drug trade, according to Spanish intelligence officials.

On June 21, authorities launched another raid on El Principe. Four hundred officers of the police and Guardia Civil participated, backed by a helicopter hovering over the densely populated canyon. Police once again arrested Marquitos, now 39, and seven accused accomplices. They are awaiting trial.

Police believe the clandestine flow to Syria continues from European hotbeds of extremism.

“There are two categories,” said a Spanish intelligence official who requested anonymity because of the continuing investigation. “Those who go intending to die quickly in a suicide attack. And there are those who want to participate in an act of jihad, taking a great risk because they are going to acquire contacts, training and experience. They want to fight, survive and return. Those are the ones who worry us the most.”



Economy & Nation Exclusive
NDTV threatens to sue its shareholder Sanjay Dutt of Quantum Securities

In probably the first such action in India, NDTV, through its law firm Amarchand Mangaldas has sent a legal notice to Sanjay Dutt, who holds a 1% stake in the broadcasting company for raising questions about its corporate policies and practices

In June, Moneylife wrote how Sanjay Dutt, director of Quantum Securities, has levelled a series of allegations about wrong practices and poor governance at NDTV Ltd. He made these charges in writing to almost every regulatory authority in India – the Ministry of Corporate Affairs, the Securities & Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and other institutional investors. See our report Allegations of NDTV’s Many Shenanigans. Following our article, on 27th June 2013, NDTV Ltd sent a legal notice to Quantum Securities, Sanjay Dutt and directors of the company,  (27th June 2013) through its law firm Amarchand Mangaldas accusing him of making defamatory statements, writing to various regulators and ‘launching a tirade’ against NDTV because he bears a ‘grudge’ against the broadcaster. This is probably the first time that charges by a significant shareholder have been termed ‘defamatory’ by a company, mainly because he was a ‘remunerated consultant’ sometime in the past. Mr Dutt and his firm Quantum Securities hold a significant stake in NDTV.

Essentially, the legal notice enumerates all the allegations that it has made in the letters attached to the article above. It also asks Sanjay Dutt to tender an unconditional apology to NDTV and withdraw all the letters, emails and complaints that he has sent to various authorities.  Moneylife learns that far from apologising, Mr Dutt sent another letter to SEBI seeking the regulator’s intervention to help a ‘minority shareholder’.  What is unique is that none of the regulators have responded to Mr Dutt, not even to dismiss his charges as false. Yet, the same SEBI has now been armed by the government with powers of search, seizure and attachment.

It is just short of a month since NDTV sent the notice, but it has apparently not translated this to actual litigation as yet.  Therefore, it is time to revisit what Mr Dutt has to say. We also emailed NDTV’s executive vice chairman Narayana Rao asking if the litigation is filed.

  • Mr Dutt’s primary allegation is that chairman Prannoy Roy and his wife Radhika Roy have received irregular promoter funding of Rs375 crore through RRPR Holdings P limited, which is against Reserve Bank rules. RRPR Holdings  (which stands for the initials of the two promoters) has a paid up capital of just Rs one lakh and holds a 29% stake in NDTV. The funds were made available to the company against the pledge of this substantial shareholding.  While the bulk of the loan was eventually repaid to the bank, a tiny sum of Rs4.40 crore remains outstanding, but, strangely enough, the bank continues to hold a charge on the entire shareholding worth Rs375 crore (as per the latest, certified ROC records obtained by Mr Dutt). This suggests that the funding has not shifted to another source, against the charge of the same shares.
  • He also argues that his campaign is against the “systematic destruction of shareholder value” by NDTV and is not motivated by personal issues. He points to buy-back transactions by the promoters, with institutional investors like General Atlantic, at a pre-decided price, which are portrayed to the stock exchanges as an “open offer”.  In response to a Moneylife query, NDTV had told us that in December 2007, NDTV’s promoters “acquired 48,35,850 (7.73%) shares of NDTV from GA Global Investments Limited, who had decided to sell the said shares, as a result of which their shareholding crossed the 55% threshold”. The open offer, they say, was as mandated by the takeover code and Mr Sanjay Dutt was a principal advisor at NDTV at that time and has advised them on the compliances in this regard.
  • Mr Dutt  also argues that while public shareholders have made no money, the promoters and directors pay themselves lavishly. As recently as 12 July 2013, the company has sought central government permission under Sec 640B for enhanced remuneration to directors, even though there are no profits from operations nor taxes paid to the government for many years.
  • Mr Dutt further says that NDTV’s executive management, a small group close to the promoters, which include editors, law firms, tax advisers and consultants have enjoyed first class business travel, hefty remuneration, ex-gratia bonuses etc adding up to a massive Rs320 crore over four years (plus ESOPS), even as the company has made losses, failed to pay dividends and not paid taxes.

The NDTV promoters together hold over 61% of the equity as per public records. In response to Moneylife’s queries, its executive vice chairman KVL Narayan Rao confirmed the serving of the legal notice and the sequence of events leading up to it.  But, nearly a month after its legal notice and our first article, there is no sign of NDTV actually filing defamation charges against Mr Dutt.


You may also want to read..

Allegations of NDTV’s Many Shenanigans


NDTV Vs WPP: A battle for Public Opinion


Once a glamour stock, NDTV headed for sickness?





4 years ago

There should be a full fledge enquiry into NDTVs top executives remuneration packages in light with the taxes and dividends paid by the company. Mr. Dutt''s concerns as a minority shareholder must be respected and enquired by NDTV to regain trust rather than legally challenge Mr Dutts's concerns.

Srinivasan Iyengar

4 years ago

Most of the media houses have dubious funding sources, lack transparency and do have shady activities - Perhaps all these features are very obvious in NDTV! With regards to this specific incident, I don't think anything concrete will come out - it will all be settled "amicably" with all the stakeholders and the party will continue..

Only if the law enforcing bodies in the country would regularly do their job (without fear or favour!)things may improve but that's not going to happen in our lifetimes

PS: Excellent article though, Ms.Dalal


4 years ago

Yes Mr. Sanjay Dut made a crime by investing in NDTV...which has already punished all minority shareholders by great wealth destruction.. and yes SEBI will help ..... but to corporates and not to minority shareholders

nagesh kini

4 years ago

There is definitely a massive personal ego issue in this entire affair.
Wonder why the existing Co. Act Chapter VI provisions on Prevention of Oppression and Mismanagement not invoked, after all a minority shareholder concern is under attack.
In stead of beating about the bush NDTV's Mr. Narayan Rao and the legal eagles need to rebut each and allegation levied.
Being a high profile media house doesn't empower NDTV to browbeat anyone!

Dr Pankaj Gupta

4 years ago

agree with pushkar !!

pushkar kulkarni

4 years ago

it seems to be bark of ndtv than bite!!

who blinks first seems to be the case?!

about journalism standard of ndtv, barka roy and other episodes etc, lesser the said, better it is.


pushkar kulkarni

4 years ago

it seems to be bark of ndtv than bite!!

who blinks first seems to be the case?!

about journalism standard of ndtv, barka roy and other episodes etc, lesser the said, better it is.


L&T’s deteriorating margins and weaker execution a concern, says Nomura

Macroeconomic headwinds, longer execution cycle and poor margins are big hurdles that L&T needs to clear their huge order book backlog, which is a daunting task, according to the brokerage

Larsen & Toubro is going through a difficult phase, with margins and execution both weakening amidst difficult economic times and increased competition, according to Nomura Equity Research. The brokerage downgraded L&T’s target price to Rs921 from Rs997 while maintaining a ‘neutral’ stance.

 “We believe that L&T is among India's best players on infrastructure and the corporate capex cycle. However, an unfavourable macro environment and impediments to new orders driven by policy paralysis across sectors plague the medium-term growth and margin outlooks for the company. We are 5-6% lower than consensus on FY14/FY15 PAT estimates,” Nomura said in a research report.

The infrastructure sector has been riddled with execution problems for the last few years, particularly the power segment where orders have stalled and state electricity boards restructured. Hydrocarbons and heavy engineering were the key margin drags, while power dragged down revenue growth. Nomura believes that execution will be difficult and could drag revenues.

Nomura, “On our estimates (for L&T) to achieve revenue growth of 15%y-y (with revenue break up 80:20 –exports: imports), the execution rate on the domestic order book has to be close to 43%. We believe it will be difficult to achieve such high execution rate given 27% of L&T’s order book is from the B&F segment (primarily domestic) where execution cycle is higher.”

Even though order inflows for L&T have been strong this quarter. The order inflow during first quarter of the 2014 fiscal was pegged at Rs25,200 crore, while the total order book as of March 2013 was Rs1.65 lakh crore. Order book growth rate was pegged at 20% year-on-year, which is optimistic. Despite macroeconomic headwinds, Nomura expect L&T’s revenue growth will be driven by higher execution of domestic order book.

 Two key factors that affect L&T are longer execution times and poor margins. The company is less inclined to press ahead with projects if margins deteriorate. “A depleting book to bill ratio in exports and faltering revenue growth in domestic markets are a key concern area,” says Nomura .

According to Nomura, the company has retained its full-year guidance for order inflow and margins, but was cautious about the future citing difficult macro economic environment.

L&T shares closed 4% down at Rs867 on the BSE, while the 30-share Sensex too ended 1% down at 20,090.


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