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Aim to keep green products, services portfolio at 25% of our offerings: SN Subrahmanyan, MD & CEO, Larsen & Toubro

Our proactive approach to managing the business, with a primary focus on stakeholder well-being, has enabled us to overcome the challenges and imbued us with a spirit of resurgence, he said.

SN Subrahmanyan, managing director & CEO, Larsen & Toubro
SN Subrahmanyan, managing director & CEO, Larsen & Toubro

Larsen and Toubro (L&T) is looking to increase the contribution of its technology portfolio vis-a-vis the traditional businesses. Aiming to reduce its carbon footprint, the company has also raised the revenues of its green portfolio to Rs 27,700 crore, which is 29.6% of the overall pie, SN Subrahmanyan, managing director& CEO, tells Shubhra Tandon. Excerpts:

The year 2020 had a rocky start. Though 2021 was not smooth either, businesses were able to gather some momentum, gaining from the lessons learnt the previous year. What is the outlook for 2022, given that the pandemic continues to impact businesses?

Our proactive approach to managing the business, with a primary focus on stakeholder well-being, has enabled us to overcome the challenges and imbued us with a spirit of resurgence. To us, the road ahead looks a lot less bumpy. We expect to maintain low to mid-teens growth in order inflows and revenues in FY22.

The pandemic has led to the emergence of new business models. What have been the changes at L&T?

‘Imagineering’ is in our DNA, with technology being at the core of everything we have done over the years. Our initiatives to enlarge our technology footprint will result in the technology portfolio increasing its contribution vis-a-vis the traditional businesses. We have in our sights the long-term prospects, emerging technologies, and new growth opportunities. The ambit of this plan includes streamlining the business portfolio, charting a geographical business strategy, investing in new businesses, and building a leadership plan, besides working out the long-term capex outlay.

The engineering and infra space saw 20% y-o-y growth in ordering in H1FY22, but inflows in the first two months of Q3FY22 were down by 20-30% y-o-y. What is the outlook for large government orders?

The tender pipeline from the states and the central government adds up to close to Rs 4 trillion for Q4FY22. And we think that 70% of these orders will materialise from the infrastructure sector. Investments are happening in transportation infrastructure, the heavy civil segment, and water, and the order outlook for data centres, public health care, hospitals, etc has turned promising of late.

Do we see the share of green offerings/bidding for green projects increasing? If so, what is the share you are looking at?

Our enhanced focus on environment, social and governance (ESG) parameters has enabled us to engage with stakeholders in a more holistic manner. We are focussed on growing the green business portfolio, which includes design, engineering and construction of green buildings and campuses, energy-efficient effluent and water treatment plants, smart cities, microgrids, etc, supply of renewable energy and creation of carbon-capture solutions. The commitment to a green future has seen the company increase the size of its green portfolio to `27,700 crore, which is 29.6% of its overall revenues. We aim to maintain our green products and services portfolio at 25% of our cumulative offerings.

Digitalisation is one area that has gained salience since the pandemic struck. How far have you gone in adopting it?

L&T is using technology and innovation to achieve sustainable growth. From using new platforms based on AI for its construction business, to connecting 11,000 pieces of equipment being used at project sites for real-time visibility, L&T has been changing the way it operates. Digital chipsets to track and monitor assets and geospatial tech, LiDAR and drone-based surveys helped us capture and monitor site data remotely during the lockdown. We want to demonstrate how a digital transformation can be achieved speedily on a large scale, propelled by the power of data-driven decisions.

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