Mumbai: Larsen & Toubro will come out with a five-year strategic plan next week and also give a greater thrust on services businesses in finance, infotech and realty, as part of a de-risking move.
“We are launching our five-year strategic plan for the Group on (July) 12th,” Larsen & Toubro chairman A M Naik said here.
“It (services businesses) is at the centre of L&T core vision going forward. In our next five-year plan, we have very clearly narrated that these four businesses will be very important to L&T Group,” he told reporters later.
Mr Naik, however, did not explicitly mention which are the four businesses he was referring to. The Group has a presence in realty, infotech and financial services space, besides the flagship EPC company.
The chairman explained that 70 per cent revenue of the Group, which counts on the engineering, procurement and construction business as its flagship business, comes from the “risky” project side and hence, services can be of help in de-risking.
“(If) one project does not do well, you lose a lot of money. While (in) the services business, be it financial services, be it IT or technology services and to an extent, when we have our land bank, the realty. They are steady business with steady income and profits. So, it is a big cushion to the rest of the portfolio which is very risky.”
Declining to spell out the exact details of the plan, Mr Naik said these four businesses will be the focus areas.
“We have a great hope that we will innovate, we will recreate and make sure we are up to date in whatever new technology that the business needs,” said Mr Naik, who retires in September next year.
Mr Naik cited L&T Smart World and Communication, a division within the L&T Construction, saying it was first off the block to offer solutions for smart cities.
It is clocking a revenue of Rs 1,000 crore at present, Mr Naik said, adding he hopes it to grow to Rs 5,000 crore in the next five years.
Mr Naik said the launch of the strategic plan will be followed up with the top management by investing a day to find out what can digital technologies do to their respective businesses on July 13.
Mr Naik said there are over 20 Chief Information Officers (CIOs) across Group companies, who will sit together to discuss the applications of digital technologies.
The Group’s tech arms – the IPO-bound L&T Infotech and L&T Technology Services which serves the engineering sector – will also help the companies as part of the exercise, he said.
After the ‘digital day’ in July, the company will be hosting ‘only digital and new-age technology workshop’ with professionals from across the world in September, he said.
Speaking at the maiden IPO roadshow for L&T Infotech in the city, Naik said contrary to perception, the company is very important for the Group.
“It is very important, contrary to what many people think that it is not a core business of L&T. According to me, it is the corest of core,” he said.