Larsen and Toubro is focusing on accelerating revenue growth in its two services arms, LTM and LTTS, to over 15% from the current 10-11% rate, according to R Shankar Raman, president and whole-time director for finance. As reported by Rediff Money, Raman emphasized that "Services has to pick up pace; we are growing at about 10-11% on a year-on-year basis. For a mid-sized firm, that rate needs to go up." Both companies are engaged in IT services and engineering services respectively, and the focus is on scaling up the services business through new markets and businesses. The company is particularly targeting new markets, particularly in the US and Europe, where demand is much higher than in India.
According to Raman's statements to reporters, both LTM and LTTS are positioned as mid-sized players in their respective industries who need to accelerate their growth. He noted that "a large company registering revenues of USD 5 billion or more per quarter can grow at single digits per year given the large base, but a mid-tier player needs to grow at higher levels." The company is leveraging AI-led disruption as a key advantage, with Raman explaining that "the advantage of disruption is that it brings everyone on the same level. The lead that the traditional leaders enjoy sort of reduces when a disruption occurs." Raman stated that both companies are "lesser disadvantaged" in this scenario, making deployment of the right talent with requisite skills critical for success.
As reported by Rediff Money, Raman highlighted that layoffs by peers who hired aggressively during the COVID pandemic are turning into an advantage for L&T's services arms. "During COVID, companies added people like there is no tomorrow. They are all getting resized now. We are picking up now," he stated. These employees bring domain expertise that the company may not otherwise possess, with Raman noting that "these employees get domain expertise which the company may not otherwise possess." The company is also deploying significant technology in its operations, making it appear like an IT company providing finance services. Raman explained that "a big tech backend helps the business," while the parentage also helps L&T Finance access funds at competitive rates for margin expansion.
According to Raman's statements, there has been a realignment in the financial services business to focus more on retail lending business, with the riskier parts being exited. As reported by Rediff Money, the company is deploying a lot of technology in its operations, which makes it look as if it is an IT company providing finance. The parentage also helps L&T Finance access funds at competitive rates, which can be beneficial while expanding margins. Both LTM and LTTS have had initial successes on the AI front, which is reflected in their profit margin expansions, with Raman stressing the need to keep the momentum going.