The conglomerate’s latest five-year strategic plan – Lakshya 2026 – was to be formulated in 2020, but given the uncertainties created by the COVID pandemic, the exercise was postponed to March 2021.
During the exercise, several CEOs from other notable companies and thought leaders from across the globe shared with L&T’s senior management their views on business environment, aspects of leadership and what the future holds. This not only enriched the perspective of L&T’s leadership teams, but also gave an insight into how successful companies view business strategy.
It was a humongous and high-intensity exercise that lasted almost a year, with the involvement of 400-odd personnel from across all L&T business verticals.
After multiple rounds of reviews, in March 2022, L&T’s Board of Directors approved Lakshya 2026. The plan reinforces the boundaries of existing businesses and identifies sectors to pursue value- accretive growth. It also clearly states the non-core businesses that L&T plans to exit or restructure by 2026.
Lakshya 2026 extensively outlines the plans to develop value-accretive offerings to leverage the energy transition wave, and to scale up e-commerce, edutech, data centre and cloud businesses. Business sustainability through focus on ESG and shareholder value creation remains a key driver. In effect, Lakshya 2026 provides a concrete idea about the future that L&T is shaping for itself.
Lakshya 2026 has two layers. The first contains an overarching strategy for L&T Group, formulated by factoring in evolving trends, technologies, and business scenarios the world over. The second comprises individual business-level detailed plans that are congruous with L&T’s Group-wide strategy.
“Our focus is to ensure sustainable profitable growth of the current business portfolio. In addition, as an organisation, we will evolve constantly, accept new ideas and re-vision our thought processes. We look forward to incubating newer businesses during this plan period,” says L&T CEO & MD Mr S N Subrahmanyan.
When it comes to exploring new business areas, the Group has chalked out an ambitious plan – to venture into green hydrogen development, electrolyser and battery manufacturing, data centre and cloud businesses.
That’s not all. Riding high on the ever- increasing revenue from its two IT companies – LTI and Mindtree, and the technology services company – LTTS, L&T plans to upscale them further, including through new acquisitions. A scale-up has also been planned for the B2B e-commerce platform L&T- SuFin, e-learning platform L&T EduTech, and the real-estate business L&T Realty.
For L&T Financial Services, the conglomerate’s strategy is to focus on ‘retailisation’ of the portfolio by leveraging digital tech. With the mantra of ‘shrink to grow’, it plans to exit real-estate and infra financing.
“Strategy development is a continuous process. Over the past three years the Company has been identifying new ideas for growth across multiple industries. We prioritised ideas that were backed by megatrends for long term growth, that were related to L&T’s strengths, and that provided clarity on how we can create an advantageous position for L&T in a value-accretive way,” says Mr Anup Sahay, Head – Corporate Strategy & Special Initiatives at L&T.
“After considerable debate and evaluation, the Company decided on two new businesses, data centres and cloud services, and the energy transition space as the future long-term growth vehicles,” he adds.
These rejigs in business will have a corresponding influence on the L&T Group’s portfolio, revenue mix and profitability.
The Group’s revenue share from Projects businesses is expected to shift from 61% in FY21 to 56% by FY26, while the share from IT & Technology Services businesses is expected to grow from 19% in FY21 to 27% by FY26. The Group revenue is projected to almost double – from Rs 1.4 lakh crore in FY21 to Rs 2.7 lakh crore in FY26.
“Society and sustainable development have always been at the heart of L&T’s existence. In addition to the targeted revenue growth, we are also working towards increasing gender diversity in the workforce. By FY26, we are targeting women to comprise 10% of our workforce as compared to the present 6%,” says Mr Subrahmanyan.
Lakshya 2026 has also set a target for the Group to extend the reach of its CSR initiatives to 15 lakh underprivileged people from the present 11 lakh. L&T Group has also outlined its plan to achieve water neutrality by 2035 and carbon neutrality by 2040. Of this, the target is to achieve 40% by 2026.
The purposeful leveraging of digital tech for new revenue streams and operational excellence across all businesses will reposition L&T as a future- looking tech-driven engineering and solutions conglomerate.