In conversation with Amit Chadha, CEO and Managing Director of L&T Technology Services

As we continue to harness emerging technologies, we are poised for continued growth, driving value for our clients worldwide, asserts Amit Chadha, CEO & Managing Director, L&T Technology Services (LTTS).

What were the factors contributing to the company's performance in Q4FY24, with the top line experiencing a 4.78 per cent increase from the previous quarter, and the bottom line reporting growth of 1.37 per cent from December 2023?
We have had one of our best quarters in the recent past with broad-based growth and traction in large deals. The last quarter was noteworthy due to significant deal wins, including a USD 100 million (Rs 800 crore) contract with the Maharashtra State Cyber Department under the Government of Maharashtra. This major contract provided considerable momentum for the quarter and is a continuation of the deal momentum that we witnessed throughout the year. For FY24, we closed 25 large deals valued at more than USD 10 Million, including 1 USD 100 million deal, 3 deals in the range of USD 30 million to USD 50 million and 9 deals in the USD  15 million - USD  20 Million range.

Several of our verticals, such as telecom, hi-tech, and plant engineering, demonstrated impressive sequential growth. There is heightened demand in Engineering and R&D (ER&D), particularly in areas like cybersecurity, AI, and software-defined vehicles (SDV), alongside traditional engineering services. At LTTS, our extensive engineering expertise across these verticals allows us to effectively meet diverse customer requirements globally, facilitating holistic growth.

For the fiscal year FY24, we achieved a 17.9 per cent growth over FY23 in constant currency to USD 1.16 Billion, before the financial restatement effect related to the Smart World and Communication integration.

As we continue to harness emerging technologies, we are poised for continued growth, driving value for our clients worldwide. We are now embarking on the next stage of growth with a ‘Go Deeper to Scale’ strategy under which we will streamline our organization into 3 segments – Mobility, Sustainability and HiTech. This cohesive structure will enhance our agility and domain specialization, lead to faster decision making and unlock higher value for our global customers.

How do you anticipate the impact of the recent strategic partnership between FORVIA and L&T Technology Services on ultra-low emissions engineering in Germany and India for the upcoming quarters?
The strategic partnership with Forvia represents a significant contract of approximately USD 50 million for Engineering development activities and the beginning of a long-term relationship on clean mobility solutions and ultra-low emissions engineering.

Forvia is addressing the evolving automotive landscape on ultra-low emissions while ensuring high-quality engineering support and providing new opportunities in engineering mobility both in Europe and India. LTTS brings in capabilities across Electric, Autonomous, Hybridization, SDV, AI and digital transformation to advance clean mobility engineering capabilities.

This partnership is crucial because it involves two key areas of engineering development. Firstly, we will assume responsibility for traditional internal combustion engine (ICE) development from Forvia. This transition allows both companies to concentrate more on our Sustainable Transportation division, also known as the Clean Mobility division. LTTS has integrated about 300 engineers from Forvia, who will continue ICE-related activities within LTTS, thus enabling Forvia to focus on clean mobility projects where LTTS will also be a strategic partner. Furthermore, such partnerships reinforce our global presence, particularly in Europe where we are seeing good demand and growth over the past few quarters.

Our experience of working with 8 of the Top 10 Automotive R&D Spenders in areas such as SDVs, Electrification and Hybridization, position us as the preferred partner for Global OEMs and Tier 1 suppliers, reinforcing our commitment to excellence and innovation in the automotive sector.

Do we have any new acquisitions in the pipeline following the successful integration of SWC?

The LTTS M&A team is on the lookout for niche technology companies in domains like ISV, MedTech and Automotive in North America and Europe to further augment our capabilities. The discussions are still ongoing and may take some more time to conclude.
 

At the moment, what are your top 3 strategic priorities?

As you know we recently undertook a strategic realignment of our organizational structure into 3 main segments- Mobility, Sustainability and Hi-Tech to drive future growth, scalability and technology innovation. This ‘Go Deeper to Scale’ strategy is our top priority and it is already making notable progress for us as an organization.

Secondly, investment in niche technology domains to accelerate future growth. As we move past the USD 1.2 Billion revenue run rate and into the next phase of growth, we will be making investments in areas such as Mobility, AI& Hi-Tech and Digital Manufacturing Solutions. A higher rate of growth will also benefit LTTS’ EBIT margins.

And thirdly, continuous reskilling and upskilling of our engineering workforce on cutting-edge technologies through platforms like our Global Engineering Academy and alliances with leading hyperscalers. We have already trained over 3,000 of our engineers on AI technologies using the tools and platforms of our hyperscaler partners.

How do the recent successes in cybersecurity and next-generation communications align with the company's long-term goals and vision?

Cybersecurity and next-generation communications have received a significant boost following our integration with Smart World and Communication, and we are building on the momentum in this critical area. This is our 2nd large deal in Cyber– previously in the third quarter we had won a global deal with an OEM in the cybersecurity space.

Our credentials for offering cyber-security solutions to our global enterprise customers strengthen with this large-scale State-wide command & Control center implementation and post the SWC integration, LTTS is now winning large deals against more established players. This engagement will help open up opportunities for us globally as cyber threats are proliferating in a highly connected digital world. We have developed AI/ML-driven solutions with a playbook for full life-cycle cyber security management addressing critical infrastructure like Power, Utilities, Oil & Gas, Digital Manufacturing and Smart Cities.

Disclaimer: The article is for informational purposes only and not investment advice.