Diversified conglomerate Larsen and Toubro (L&T) has announced a new strategic initiative that will focus on emerging technologies.
The company said that the initiative, called L&T-Nxt, is aimed at innovation while reaping the benefits of digitisation. It will focus on areas such as artificial intelligence (AI), Internet of Things (IoT), virtual reality/augmented reality (VR/AR), geospatial solutions and cybersecurity.
The development comes in the backdrop of L&T’s hostile takeover bid for homegrown IT services firm Mindtree Ltd.
Under its five-year strategic plan, L&T will make significant investments in monetary and human resources, said group chief executive and managing director SN Subrahmanyan.
“Disruption has become the new order and as we embrace new and frontier technologies, our businesses are leapfrogging into entirely new realms powered by the tremendous benefits of digitalisation and analytics,” Subrahmanyan added.
The $17-billion L&T group has interests in construction, real estate, defence, financial services and information technology, among other sectors. The lines between physical and digital are blurring with the advent of Industry 4.0 paradigm, L&T said. It added that the company was ideally placed to capitalise on emerging opportunities with its diverse interests in multiple business verticals.
The Mumbai-headquartered company said that it has made one of the largest deployments of IoT, analytics and AI in the industrial sector by converting most operational matters into smart, affordable and extremely efficient solutions.
“Having reached a critical juncture in its developmental cycle, we are training our sights towards accelerating top line and bottom-line growth and, at the same time, expand its potential for value creation by adopting a fresh mindset and building a new structure ground up. With this strategic effort, we are confident that this will be an enabler for our businesses," said JD Patil, senior executive vice president (defence business).
The engineering giant, which offers IT services under L&T Infotech, had made a hostile bid to acquire Bengaluru-based Mindtree Ltd for as much as $1.6 billion last week. It has already bought a 20.32% stake from Coffee Day Enterprises founder VG Siddhartha. In addition, it has made an open offer to buy up to 31% from public shareholders and is looking to purchase another 15% from the secondary market.
However, L&T’s overtures have not been met with enthusiasm by Mindtree’s founders, who own a 13.33% stake in the company. At a press conference last week in Bengaluru, presided over by executive chairman Krishnakumar Natarajan, non-executive director Subroto Bagchi and chief executive Rostow Ravanan, the founders termed the hostile bid “value destructive for all the stakeholders”.