“We are the largest pureplay engineering services firm from India, and I do believe that we have it in us to make it to the top five global engineering and research & development technology companies. While today we are in the top 10 firms, we have set a plan to get to the global top five firms,” says Chadha.

Chadha has not only outlined the internal strategy and focus areas for the company, but has also laid much emphasis and study on future verticals where LTTS can grow into a dominant position and command a formidable space. Besides, engineering and research & development are fields with enormous growth prospects.

The innovations in ER&D can be enormous. In home automation technology, most houses will be fully connected by 2030 with 75 per cent using remotely monitored devices and voice-activated appliances. Houses will evolve as energy efficient, secure, sustainable homes.

Second, in transportation and telecoms there have been rapid changes too. More than 71 per cent expect to use electric vehicles, while the shifts from 4G to 5G to 6G will accelerate. About 51 per cent of people feel they will travel by hyperloops. In medical technologies, by 2030 again, 83 per cent believe in personalised preventive plans, while 80 per cent will use diagnostic at-home applications.

Not only that,with factories automating rapidly, more than 20 million robots will be working in factories by 2030. In shops, some of the changes on the anvil could see the adoption of 81 per cent of digital technologies such as virtual and other realities. 

LTTS is proving itself to be one of the shining stars in this field. With a strong engineering DNA stemming from the L&T group, LTTS was conceived as an extension of Larsen and Toubro in the field of engineering back in 2009. Some of the innovations the firm has built is an autonomous welding robot solar connectivity drone and the smartest campus in Israel. The firm has filed 868 patents and works closely with 57 of the global Top 100 ER&D spenders and engineering conglomerates such as Airbus above.

LTTS, in fact, is a specialist in disruptive technology such as 5G, artificial intelligence, collaborative robots, digital factory and autonomous robots. With more than 70 labs across the world, very few companies can match the scale of innovation possible from LTTS.

Strategic shift

LTTS is now building on its strong foundations, with Chadha introducing a new six-dimension approach to take the company forward. One of the first points of the glide path ahead recognises the need for industry-leading growth. Second, the firm will focus on customer-centricity, keeping in mind the next-generation technological needs of clients.

Another glide path will be employee and people engagement. The fourth aspect that LTTS has introduced in its roadmap is the technology quotient factor that will look at enabling technologies. Besides, another strategy that LTTS has adopted is looking at a sustainable operating model, while the sixth dimension will focus on environmental and sustainable governance.

“Our mission is to be the engineering partner of choice by enabling innovation with world class technology, processes and people, delivering inclusive growth for all stakeholders. We have defined our values. And our values being purposeful ethics and integrity, caring or culture of learning and results with accountability. This becomes a common language for the company as we move forward,” says Chadha.

That is not all. On the technology side, LTTS has also identified six strategic bets and high growth verticals for investment and growth: EACV (Electric, Connected, Autonomous Vehicles); MedTech, 5G and telecom, AI & Digital Products, Digital Manufacturing and Sustainability. All these verticals have a high-growth outlook. “While these sectors contributed less than 35 per cent of our revenues, we believe in the next five years, these sectors will contribute to more than 75 per cent of our revenues,” says Chadha.

No doubt, with all the focus on growth and new verticals, LTTS is also aiming at a higher annual revenue run-rate. Its management said that it aims to reach a $1 billion annual run-rate by Q2/Q3 FY23, which means that it should be able to show good growth rates in the next few quarters.

But, given that demand for ER&D services globally is rising phenomenally, LTTS is confident of sustaining the strong growth rate beyond FY23 too. In fact, it aims to reach an annual $1.5 billion run-rate by FY25, which is a phenomenal growth run-rate. That means that LTTS will add about $600 million in revenues over the next three years, from the present $900 million. 

In the coming years, it will focus on margin improvement as well. Given the improvement in scale and higher-margin deals, its EBIT (earnings before interest and tax) margins have expanded, from about 11 per cent a few years ago to around 18 per cent currently. LTTS aims to hold to this margin in the coming years.

“We are on course on the profitability path with a focus on margins. You have seen our margins improved and now we are at an 18 per cent-plus margin rate. We will continue to work on that,” says Chadha.

Lab push

The firm spends a lot of money on technology, training, and in building platforms to stay ahead of the curve. One of the core operating requirements for ER&D companies is the extensive use of laboratories to conduct various types of research. LTTS has constantly built and upgraded new labs. The firm has 89 innovation labs across the world in India, Europe and US.

Some of the investments LTTS has made include an electric vehicle lab and that’s paying off well; it has been expanded to test more products. LTTS has also developed a new lab on harness and electric in the US, and these investments are working well for the firm. The firm has also created an EV charging infrastructure in Baroda that actually charges the golf carts in the campus.

On the 5G front, LTTS has established three labs in Bengaluru, Mysuru and Dallas, US. LTTS is also looking to set up another 5G lab in Munich. The company is also thinking of manufacturing digital products. On that front, the firm has invested heavily and is tying up with companies like Bentley, and Microsoft to establish augmented reality/virtual reality solutions that can help on the shop floor and improve reliability, predictability, and productivity. It has also recently set up its Metaverse practice in Chennai, bringing together its expertise in 5G, digital products & AI, and digital manufacturing.

In MedTech, LTTS will launch its own AI platform for chest X rays called chest rAi and that essentially helps one to define the number of diseases and identify them. Second, LTTS is also working with IIT Madras on sepsis detection. Besides, the firm is working on a ventilator design and also an ambulatory ventilator.

LTTS is also involved in multiple areas of research for future use and to get a grip on underlying technologies in emerging fields. “We are investing nearly 2.5-3 per cent in technology, training and tech platforms. Often, we invest in new products and user cases to understand the space and the technology required. The EV lab we set up in Baroda is a step in that direction. It builds our domain knowledge,” says Chadha.

Deal winner

LTTS is also focusing on large deals. Lately, it secured several, including a $100 million deal from Jaunt Air Mobility, for a new-age vertical take-off-and-landing program. In fact, the latest quarter has seen strong deal bookings continue, with the company bagging nine $10 million deals, and one of $25 million.

This is one focus area for LTTS, given that deals in new verticals would reinforce management emphasis on future goals, and are an important aspect of growth ahead. “We are creating a rhythm out of the number of deals that we are closing,” says Chadha. Due to its focus on winning deals, analysts continue to see LTTS as a beneficiary of the growing penetration of ER&D services, seeing it a top Tier II technology play within the IT fold.

 People focus

Another big area for LTTS has been people management and inclusive growth employees. The company is ensuring that it provides opportunities for people to grow internally and, in the last few months, it has been running various mentoring and management programs which also train people to take up leadership roles in the organisation.

One such program is CEO Club, a unique industry-level leadership development initiative it has undertaken. Employees can apply to be a part of the process where they undergo a five-stage selection process. LTTS partners with external jury members to shortlist a handful of candidates who undergo a one-year intensive training program along with the CEO.

Over the years, there have been many successful transitions of winners of the CEO Club to leadership roles. One of the CEO winners has taken up a leadership role in cybersecurity practice; another is heading the transportation vertical on the West Coast.

“The objective is to create a new class of high potential leaders across LTTS to drive transformational and sustainable growth. The platform also provides these budding leaders a fast-track career progression path by placing them at the helm of the strategic initiatives and mobilising leaders within the organisation,” says Chadha.

The winners of the last edition of CEO Club included LTTSites from the transportation, plant engineering, medical and digital products & services segments. To boost talent in the country, LTTS is also running a ‘TECHgium’ program, one of India’s largest open innovation initiatives held in partnership with academic institutions. This initiative collaborates with academic and research institutions to develop innovative solutions to customer challenges. Not only are successful students rewarded with job offers, but the developed solutions to problems are also being offered to customers.

LTTS invites students to register and helps them incubate their projects, and secure recognition as TECHgium innovators. “Students consider this an open innovation platform to address industry challenges to work with our solutions-development team to develop and present technical papers,” says the chief operating officer, Abhishek Sinha. Since inception in 2017, TECHgium has seen an exponential increase in student participation from reputed institutes across the country.

To encourage innovation and transformation within, LTTS has focused on developing the technology quotient of the organisation by introducing a Global Engineering Academy (GEA) in April 2020. The purpose of GEA is to impart technology training with the support of the in-house technologists and the CTO Team. The program provides employees with a platform to reskill and reorient themselves to keep up with rapid technology changes and advances in their careers.

GEA directly works with business groups and stake-holders to design, develop and deliver technology-competent development initiatives to meet one of its biggest business challenges on re-skilling and cross-skilling of resources. In FY21, GEA provided technical training for over 5.35 lakh man hours.

The New Avatar 

LTTS continues to innovate on the business front as well and build an emotional connect with its people and customers. After months of discussions, group sessions and leadership gatherings, it recently unveiled its Culture Manifesto, ie its vision, mission and values statement. In the manifesto, it highlighted its core values, namely, Being Purposeful, Ethics & Integrity, Caring, Culture of Learning, and Result with Accountability, which form the cornerstone of its new avatar.

In the next phase of this journey, LTTS plans to organise over 700 workshops across all its global locations, thus training LTTSites and creating an emotional connect with these values. LTTS employees have created ‘Value Walls’ in some of the India centres, a mural expression of the core values intrinsic to LTTS.

While it will add wings to LTTS growth strategy, the emphasis on sustained growth will sweeten the goal. No doubt, analysts expect LTTS to easily achieve its ambition of $1.5 billion in revenues by FY25. Chadha sums it all up succinctly. “The mantra that we want for all of us including partners, customers, stakeholders and, most importantly, employees, is profitable, sustainable, inclusive growth,” he says.