Engineering company Larsen & Toubro Ltd (L&T) has set a target of almost doubling its sales to Rs.2 trillion by 2020-21, its chairman A.M. Naik, who will be retiring next year, said.
Addressing the shareholders at the company’s 71st annual general meeting, Naik said, “I would like to take this opportunity to share my vision of the L&T of tomorrow… Our goal is to achieve a revenue of Rs.2 trillion by 2020-21 without compromising on our margins and achieving an order inflow in excess of Rs.2.5 trillion per annum.”
Naik, who has been associated with company for over four decades, exuded confidence that with the economy starting to turn around this target is achievable, provided the right strategy and on-ground execution.
He also drew his optimism from the strategic advice the company has received from two international consultants to reach these targets.
As part of sharpening the business focus, Naik said the company has “identified select growth businesses in L&T’s broad portfolio. These include IT, technology services, defence, smart world and water management.
“Our strategic plan involves re-allocation of resources–both talent and capital–to businesses with visible value creation potential. As most of these are also asset-light businesses, the initiative will be in line with our larger objective of building an asset-light organisation,” the chairman said.
The country’s largest engineering and construction behemoth had reported consolidated revenue of Rs.103,522 crore for the year ended 31 March 2016, a 12% over the previous year, and its consolidated net income for the year rose just 7% to Rs.5,091 crore.
He also expressed the hope that in the coming years, digital levers on profitability and growth will extend deeper into the organisation, alter processes and yield dramatically superior outcomes.
Group companies L&T Infotech and L&T Technology Services will play a key role in this process, he said, adding that for our technology arms, these enterprise-wide initiatives will act as a ready-to-market showcase, enhancing client confidence in their capabilities.
On the economy, Naik said, “We are at the cusp of a turnaround. All indicators are positive. The government thrust on infrastructure and the make in India initiatives provide a range of opportunities for L&T.”
The opening up of the defence sector will lead to business opportunities worth Rs.13 trillion over the next 10 years, he said and added with the resolution of issues relating to fuel supply and a clearer understanding on nuclear liability issues, the nuclear power sector is expected to grow significantly in the years ahead.
Being one of the largest firms on the nuclear energy front, L&T stands to gain a lot from this nuclear power sector as the issues relating to fuel supply and a nuclear liability has been resolved, he said.
Further, he said, the estimated business opportunity from this over the next 10 years is around Rs.50,000 crore.
On the infrastructure front, the chairman said over 1,000 projects worth over Rs.14 trillion are in the pipeline in areas like roads, ports, airports, railheads.
“L&T has both the expertise and the track record to make the most of each of these opportunities. Over the years, we have set benchmarks, only to surpass them ourselves,” he said.
On the ongoing technology-driven leadership drive at the company, Naik said, “this is more than a statement of intent. It is at the heart of the new L&T. Our mission is profitable growth through technology leadership”.
“Since 2000, we have developed and rigorously implemented a five year strategic planning process. We are now in the fourth wave of this programme,” he said.
To achieve the set objectives, the company has partnered with two global strategic consultancies to obtain an ‘outside-in’ perspective of our businesses, Naik added.