India Is Ready To Be Fastest-Growing Economy Again: Rajeev Gupta, L&T Technology

What are the six big projects L&T is working on at the moment?
We have a vision and aspiration to grow into a billion-dollar company by Q3 of FY2023, and a one-and-a-half-billion-dollar company by 2023 in terms of revenue run rate. To realise this ambition, we put a strategy in place which is mainly around six dimensions. These dimensions include industry-leading growth, customer centricity, people engagement, technology quotient, sustainable operating model, and last but not least ESG (environmental, social, and governance.).
The second part of the strategy is six big bets, which were curated due to the post-Covid upsurge of digital engineering. They will help propel the growth we will see in 2-3  years. The first big bet I would like to call out is the EACV, which is the Electric Autonomous Connected Vehicle, the second is Medtech, the third is 5G, the fourth is AI and digital product, the fifth is digital manufacturing, and the sixth is sustainability. The six dimensions and six big bets will help us make conscious investments so that we can see more sustainable, profitable, and inclusive growth for L&T Technologies in the coming years.

Since we are on the topic of sustainability, can you tell us about some of the key initiatives around sustainability?
This is an initiative sponsored and led by the CFO, which is me. We started an ESG initiative at the start of this fiscal. We have a two-year roadmap, where year one is about coming out with a sustainability report, which will help us assess via different parameters, how do we stack up, and by the second year, we will go public with our ESG goals. This initiative was launched in June 2021, where we put a steering committee in place comprising of business, CSR, human resources, and administration leaders.

The progress we have seen over the last six months has given me a lot of confidence that we are on track with our two-year roadmap. Hopefully, we should go public over the next 24 months. We are conscious of our sustainability initiative and want to be responsible citizens as far as our ESG initiatives go.

The share price of L&T has been fluctuating a lot in the last year, what could be the reason behind that?
At L&T Technology, we are focused on long-term sustainable growth. We truly believe that executing on some of the aspects of six big bets and six dimensions is a long-term haul. As far as market dynamics is concerned, the increase and decrease of share prices are beyond our control, at our end we remained committed to growth-and growth-related investments.  

Can you elaborate on some of the recent projects L&T Technology is working on?
L&T Technology is a pure-play engineering services company that serves customers across the globe. Predominantly our revenues are from the USA, followed by Europe, the rest of the world and, of course, India. We do not do projects directly with the Government of India. Our customer base includes 57 of the world’s top ER&D companies for whom we provide engineering services, partnering with them in their digital transformation journey.

What about the partnership with Microsoft? What does that bring to the table for L&T?
What you are talking about is IoT (Internet of Things) based smart manufacturing solutions. We are partnering with Microsoft on Energy and Sustainability manager. This is a comprehensive, compliance, and standard-driven solution that tracks energy losses across plants. The partnership is with the sustainability big bet in mind to reduce wastage across business and provide visibility into utility and plant equipment. Our partnership with Microsoft will help deploy energy and sustainability managers across platforms.

LTTS has also signed a ‘Science-Based Initiative Document’. Is this also related to the ESG and sustainability goals of the company?
I mentioned earlier that sustainability is an important focus area and a big bet for us. As part of our commitment towards the cause, we have signed the Science Based Targets initiative (SBTi) in October 2021. This is a commitment wherein L&T Technology will reduce its carbon emission, for which we have two years to come up with the goals. We have until 2030 to translate those goals into reduced carbon emissions. This is also to reiterate that besides advising the clients on sustainability, we are conscious and continue to work towards reducing carbon emissions.

Is international expansion a part of L&T Technology's immediate goals? What are the international projects the company is working on at the moment?
A large part of our revenue is delivered out of the US, followed by Europe, and then the rest of the world and India. We are consciously making investments in the US, Europe, and Japan, which are the three key geographies that we identified. As far as investments are concerned, we are putting up an acquisition strategy, where we want to make acquisitions in the US and Europe. We have also identified three areas for the same, which are developed capabilities in the white spaces. The first one is on the auto new tech, which co-relates to our bigger game plan.

Again, medtech combines with our big bet, which is also to build white space capability in the healthcare, and providers’ segment. The third is in ISV (independent software vendor), which we are positive will continue to present opportunities in the next two to three years. Across these three areas, the US and Europe remain our preference. We are looking to do large acquisitions than earlier which could be in the range of $50-75 million or even bigger ticket size.

What are some of the big technologies LTTS is working on now? How invested in the company on R&D?
Whatever is labour-intensive now can be replaced with artificial intelligence (AI) in the future. The thing is how can we help our clients across segments like industrial products, plant engineering, 5G, and how do we deploy AI and digital products for the same? As far as our specialisation is concerned, we are into chips, devices, networks, and enterprises as well where we can deploy AI. We have solutions as well which are Alknow platform, computer vision, cognition. So much so, that by 2025 the AI market will be close to $190 billion.  

How do you perceive the macro landscape for engineering R&D (research & development) in India?
This is a time when we are seeing a lot of buoyancy around the R&D segment. At the macro level, if we look at the IMF, their perception of economic growth is around 5.8 percent globally. However, for India, the estimate is 9.5 percent. India can again get the tag of the fastest growing economy in the world. If I have to narrow it down to an R&D standpoint, it is expected to grow between 12-13 percent CAGR. There is a good increase in demand that we see forth from here.