Inside L&T's transformation: CEO SN Subrahmanyan's vision for a future-looking conglomerate
Larsen & Toubro (L&T), India's prominent conglomerate, is striving to establish itself as a global leader in technology-driven engineering and solutions. In an exclusive interview, CEO S N Subrahmanyan discusses the company's key priorities, such as developing a strong leadership pipeline, addressing vulnerabilities, and attracting high-calibre talent to achieve this ambitious objective.
Here are the edited excerpts.
As a leader, how do you envision your role evolving in the coming year and beyond?
As the CEO of Larsen & Toubro, my primary focus for the upcoming year is to work closely with our leadership teams to reposition the company as a global pioneer in tech-driven engineering and solutions, in alignment with our long-term plan, Lakshya 2026. Additionally, incubating and scaling up new businesses and establishing partnerships in high-growth areas is a top priority to capitalise on mega trends.
Incorporating new-age businesses such as digital platforms, green energy, and digital IT & Tech Services into our portfolio demands an increased focus on new business models, so building a leadership pipeline aligned with these businesses is crucial in the coming years.
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Finding the right talent for different aspects of the business, aligning their vision and values, and addressing vulnerabilities are my key responsibilities as CEO.
I also believe that championing the company's ESG efforts, particularly the environment, to achieve our carbon and water neutrality targets, ensure sustainability across all our processes, and expand L&T's portfolio of green offerings are critical in the next few years.
What are the biggest opportunities and challenges you anticipate in 2023?
Opportunities: L&T's Infra EPC division is the company's top revenue contributor. And with infrastructure capex receiving strong government backing, there are several emerging opportunities on the horizon. The 33% increase in capex outlay strengthens their opportunity pipeline. Private capex will also pick up due to increased demand and conducive policy initiatives like PLI schemes and Atmanirbhar Bharat, with some green shoots already visible in sectors such as metals, cement, and chemicals. Energy transition and security will drive demand for clean fuel, energy storage solutions, and transmission infrastructure beyond solar power.
Challenges: I see our international presence as quite sizeable. Managing geopolitical risks and stakeholders in the geographies where we operate remains paramount, and it is crucial to build agility to adapt to volatile macroeconomic and geopolitical situations.
Maintaining profitability while dealing with high input costs and supply chain disruptions is a challenge that we must tackle. It is important to secure key raw materials at a reasonable cost with delivery schedules aligned to production and execution needs.
Another challenge is talent retention and acquisition to fulfil the requirements of various businesses. We must ensure that we have the right people in the right roles to drive growth and success.
How are you leveraging digital transformation to drive business growth and adapt to the changing market?
In an environment where input costs fluctuate with the vagaries of geopolitics and supply-demand play, one has little control over externalities. To succeed in a volatile market, we are leveraging digital transformation to improve internal processes and respond quickly to changing demands. Here's how we are doing it to streamline processes, reduce costs, and improve customer satisfaction.
- We have implemented digitalisation extensively in estimation, design, procurement, manufacturing, project execution and O&M to improve efficiency, productivity and transparency.
- Use of IoT, automation, drones, LIDAR, BIM, analytics, machine learning and RPA has enabled real-time updates, predictive analysis and decision support. We are using AR/VR, sensors on safety gear and geo-tagging for safety and productivity enhancement, and digital twins for faster design and customization. In manufacturing, we are digitalising day-to-day operations and integrating all point solutions into a single platform.
- We have also created new digital platform businesses like Edutech and Sufin to capitalise on opportunities for growth.
What steps are you taking to ensure the sustainability and resilience of your business in the long term?
We are focused on developing and expanding our business offerings in line with global megatrends to ensure the resilience of our business. Our efforts include:
Energy Transition: Developing our green portfolio by offering new and improved solutions such as green hydrogen projects, green buildings, and mega solar projects with a capacity of over 1 GW.
Digital Transformation: Investing in high-growth areas such as data centres, cloud, AI, cybersecurity, and blockchain to improve our capabilities and offerings.
L&T aims to be carbon-neutral by 2040 and water neutral by 2035. We're promoting sustainability by reducing fossil fuel dependence, increasing renewables, using recyclable materials, increasing wastewater recycling, integrating ESG into strategic initiatives, and collaborating with vendors to build a green supply chain.
How are you addressing the shift towards remote work and flexible work arrangements?
The pandemic has brought about significant changes in the workplace, prompting companies to adopt various models to suit their business scenarios. As a predominantly construction and EPC business, remote work is not a feasible option for us. However, we have adopted a hybrid approach in our services business when necessary. Our priority is to ensure the safety of our employees and equip them with productivity tools for business continuity. We are committed to diversity and inclusion, particularly the inclusion of women in senior leadership roles and supporting those returning from career breaks. Our core values prioritise employee well-being, which we support through facilities such as wellness rooms, creches, and medical rooms.
This interview is part of an exclusive series featuring CEOs and MDs of top organisations sharing their perspectives on the ever-evolving business landscape and the future of work. Watch this space for more insightful conversations.