Larsen & Toubro Ltd. (L&T) is deepening its presence in data centers, having invested around INR 2,200 crore with 32 megawatts already operational, including a 30 MW facility in Kanchipuram, Tamil Nadu, one of the largest in India.

The company plans to scale this to about 100 MW, tapping demand for third-party storage and cloud infrastructure. Chairman and Managing Director S.N. Subrahmanyan said in an interview on Sunday that most Indian companies have been storing data on premises, but now the option is to store on third-party data centers and use cloud services from Amazon, Google, or Microsoft.

GPU-Based Cloud Services and Technology Partnerships

L&T has also entered GPU-based cloud services through a stake in E2E, an Indian startup working with US chipmaker NVIDIA. The company has two or three floors of a data center in Chennai with NVIDIA GPUs, providing cloud services to customers. Subrahmanyan noted that it's still a very nascent business, but they've put in close to INR 2,200 crore and are backing it with strong leadership.

The company is positioning itself to benefit from the boom in Global Capability Centres (GCCs), as global firms expand technology operations in India. Subrahmanyan said many companies are now opting to build their own GCCs rather than rely on IT service providers. Sometimes L&T collaborates to help them set up a GCC, and over time, they may take it over or run it jointly with L&T, representing emerging business models the company hopes to capitalize on.

Defense and Aerospace Operations

Defense and aerospace remain central to L&T's growth strategy, with the company rebranding its defense arm as “precision engineering” to reflect contributions to military and space programmes. Subrahmanyan outlined four broad areas of operation: land systems such as mobile bridges and the K9 Vajra gun, naval systems including submarines and surface ships, contributions to space, and indigenization through R&D.

The K9 Vajra artillery system, developed with South Korea's Hanwha, has been a success. L&T delivered about 100 units for the deserts of Punjab, and then acclimatized them for Ladakh. The feedback is that it's an excellent weapon system, according to Subrahmanyan, who added that another 100 are being prepared for delivery.

On the naval side, L&T has fabricated parts for strategic submarines and builds offshore patrol vessels and anti-submarine warfare ships. However, Subrahmanyan acknowledged challenges in surface ships. The company invested more than INR 2,500 crore in the yard, but the client is only one, the Navy, and they have to compete with five public sector yards. He noted they need to be very lucky to win orders, though the yard should break even this year.

Nuclear Energy Constraints and Thermal Power Revival

While India has shown interest in private participation in nuclear power, Subrahmanyan said current laws remain a barrier. At present, nuclear plants can only be set up by Nuclear Power Corporation. The law includes a liability clause, which makes it impossible for any private balance sheet to bear the risk. He added that reforms are being discussed but remain uncertain.

The only entity that can take on that liability is the government. L&T has given their suggestions, others have too, and the government is working on it. Hopefully, it will happen, but as of now, it hasn't, Subrahmanyan stated. Thermal power, once sidelined in favour of renewables, is seeing a revival as electricity demand grows. L&T, which had been preparing to exit the sector, is now scaling up again.

Subrahmanyan said they were persuaded to continue in this business because BHEL was overloaded, and L&T won projects at Gariyawal and Napanagar, and then another eight boilers and turbines for the Adani Group. Suddenly, the business that was supposed to be closed down is looking attractive again. L&T's earlier venture, the Rajpura power plant in Punjab, remains one of India's most efficient.

It's probably the best operating power plant in the country, with a plant load factor of over 90 percent. But it doesn't quite fit their long-term vision, so they're open to divesting it if there's interest, Subrahmanyan explained.

Strategic Business Balance

The diversified bets reflect L&T's strategy to balance its high-risk, low-margin engineering, procurement, and construction (EPC) business with asset-light, higher-return services. In EPC, 70 percent of costs are materials bought from others, so their value addition is only 30 percent. If they make 5–6 percent margins, they celebrate, Subrahmanyan said. That's why services and new businesses like data centers are essential.

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