Jul 15
TOWARDS TOMORROW
by  Angela Nagarajan on 7/15/2022 10:50 AM
TOWARDS TOMORROW
L&T is a professionally managed organisation, often  described as an engineering major and a technology conglomerate. It is indeed all these and much more. L&T is a great platform for anyone who is willing to put in the effort and pursue excellence.
 
And this has been made possible by its past leaders who had the foresight to do what mattered the most and groomed talent who gave shape to their vision by investing in the future. But to do so is not a vague exercise in identifying future possibilities. Rather, aided by a deep understanding of client preferences, it is a meticulous task of figuring out how the economy and the business will fare.
 
Though business strategy and planning always existed in L&T, it was in 1999 that the exercise of setting strategic targets was institutionalised, with the introduction of  five-year strategic plans – the first one being for FY 2001-2005.
 
Since then, L&T has been drawing a strategic plan – called Lakshya – for every five-year block. These plans act as L&T’s essential navigator to take the businesses forward and guard rails to avoid areas of strategic non-interest.
 
STRATEGY 2026

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.

GETTING FUTURE-READY

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.

PORTFOLIO MIX

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.


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Apr 19
Enter E-Commerce
by  Angela Nagarajan on 4/19/2022 12:21 PM
Enter E-Commerce
FIVE pillars – adorned with posters of inspirational quotes of Elon Musk, Jeff  Bezos,  Steve  Jobs  and  Arnold Schwarzenegger – partially obscure the view in the glass cubicles where small clutches of men and women are busy in meetings.
 
Around a large central table, about a dozen more are hunched over their laptops. Some are busy writing emails, a few others are engaged in virtual meetings and yet a few more scrolling up and down their monitors, patiently checking some documents.
 
The most remarkable feature of this sprawling hall is the silence that prevails.
 
The long, central table is assigned to the operations wing– the nerve centre of L&T-SuFin, an integrated B2B e-marketplace for buying and selling industrial and construction products, along with finance and shipping support. SuFin is the conjoined term derived from supply chain and finance.
 
These are some glimpses from SuFin’s head office, housed in The Metropolitan building at Mumbai’s  Bandra-Kurla Complex. Located on the fourth floor, this modern workplace was christened ‘the garage’ by none other than L&T’s CEO & MD Mr S N Subrahmanyan, who believes that any new business must  start  with  ‘a  garage’ before expanding its wings.
 
‘The garage’ has already witnessed more than 1,500 transactions between MSMEs in a few days since the launch, which is a testimony to what it brings to the value chain.
 
Besides the operations wing, there is another small set-up on The Metropolitan’s third floor, from where SuFin’s product catalogue team operates. There are other teams that take care of products, business development, sales, shipping and financing.
 
Business transactions – for a closed user group – on SuFin platform began in March 2021, exactly a year before the formal launch this 7 March. It was a conscious decision taken to avert technical glitches. The formal launch, hosted at AMN Tower in Powai, was both a deep dive and an exposition of a world that reflects L&T’s extensive knowledge and capabilities in procurement, logistics, IT solutions and finance.
 
L&T Group Chairman Mr A M Naik lays out the essence of SuFin. Describing it as a “new chapter in L&T Group’s growing bouquet of digital initiatives”, he underscores that with last year’s launch of L&T EduTech (an e-learning platform) and L&T-SuFin now, L&T is “reaffirming the commitment to leverage digital platforms and configure new business models that will contribute significantly to the industry value chain”.
 
Mr Naik expects both L&T-SuFin and L&T EduTech “to provide L&T with a strong entry position in the e-commerce space” and that “this will be a take-off point for a much larger scale engagement in subsequent years”.
 
L&T CEO & MD Mr Subrahmanyan has an interesting anecdote on the genesis of L&T-SuFin. “The idea of SuFin was conceived on a flight while I was discussing with a peer the operational efficiency of procurement. Since we were primarily discussing procurement for construction projects, what came to my mind was Constzon – something on the lines of Amazon. But during subsequent strategic exercise the nomenclature ‘SuFin’ was finalised,” he says.
 
Mr Subrahmanyan adds: “The total contribution of SMEs to the GDP is 37% and the growth of the overall manufacturing sector augurs well for them. L&T-SuFin would attempt solving the pain points of the MSMEs through digitalisation and automation. L&T’s deep understanding of dealing with industrial goods will ensure that SuFin becomes a platform providing the best-in-class to customers.”
 
Mr Subrahmanyan’s vision goes beyond borders. Not only does he see “SuFin expanding into multiple product lines by creating state-of-the-art solutions for industrial trade and supply chains”, once it achieves success in India, the new-age business shall “expand on a global footprint”.
 
L&T-SuFin’s Business Head Mr Bhadresh Pathak casts a wider light on the diverse spectrum of over 40 product categories that are already available on the platform. They include industrial supplies and consumables, building and construction materials, machinery, tools and mechanical equipment, electrical and electronic supplies, printing and office supplies.
 
With L&T-SuFin, one can get everything that makes a business work:
 
• Efficient product and seller discovery will enable  businesses to digitally and cost-effectively source industrial supplies across India.
 
• Online transaction facility for trading products and  related services, along with payment and settlement mechanisms.
 
• Finance support to listed entities from partner banks  and non-banking financial companies (NBFCs) for overcoming liquidity constraints.
 
• Logistical support to create convenience for shipping goods from sellers to buyers.
 
The real story involving a full-scale execution of the well-thought-through strategy has started now, but what is heartening is the high level of customer satisfaction.
 
“L&T-SuFin has helped me through the finance option for my business and I am now getting a lot of enquiries,” says Mr Mayilvaganan of Thirumalaa Electrical System,  a switchgear vendor based in Coimbatore.
 
While over 22,000 buyers and sellers are already onboard L&T-SuFin, more than 170,000 stock keeping units (SKUs) have been listed so far. And the numbers are growing by the minute. Welcome to a new dawn! 
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