L&T Defence, the defense equipment arm of Larsen and Toubro, a prominent engineering conglomerate, is set to embark on a strategic diversification journey into the realm of non-military equipment and infrastructure. This move aims to optimize its existing assets while awaiting larger defense contracts.
Effective April 1, the division will be rebranded as L&T Precision Engineering and Systems, signaling a significant shift in its business approach. The new strategy entails leveraging its defense manufacturing facilities to produce advanced non-military equipment, thereby maximizing the utility of these assets.
Despite this strategic shift, the company remains optimistic about securing additional defense contracts from both the Indian and foreign governments in the foreseeable future. L&T’s defense unit is renowned for its expertise in manufacturing a wide array of defense equipment, including guns, armored systems, missiles, aerospace systems, avionics, sensors, robotics submarines, underwater platforms, weapon delivery and engineering systems, unmanned systems, and radar systems.
Notably, the company has a state-of-the-art armoured systems complex in Hazira, Gujarat, and a cutting-edge shipbuilding facility in Kattupalli, located approximately 40 kilometers north of Chennai. Speaking about the company’s technological prowess, AM Naik, L&T’s chairman emeritus, emphasized that all of its technology has been developed in-house, without relying on foreign technology partners.
He highlighted the company’s achievement in building India’s first nuclear submarine and its collaboration with DRDO on various defense equipment development projects. While L&T has secured multiple overseas defense contracts, including recent maintenance contracts for two ships of the United Kingdom’s Royal Navy, Naik expressed the need for more naval contracts from the Indian government to fully utilize its shipyard and attract further overseas naval defense contracts.
He emphasized that additional contracts from the Indian government would serve as a crucial reference for exporting defense products, aligning with India’s ambitious target of achieving ₹40,000 crore in annual defense exports by 2026. Despite the company’s success, Naik believes that L&T’s reputation as a high-tech defense company is not as widespread as it should be.
Defense contracts accounted for approximately 2% of the company’s total revenue last fiscal year, but Naik expects this share to increase in the current financial year. Analysts at Jefferies anticipate that India’s defense expenditure will continue to grow at a compounded annual rate of 7-8%, driven by the government’s focus on indigenization.
They predict that India’s defense exports could reach ₹58,000 crore ($7 billion) by FY30, with key export destinations including Italy, Egypt, UAE, Bhutan, Ethiopia, and Saudi Arabia. L&T shares closed 1.54% lower on the BSE on Friday at ₹3,741.65 apiece. Despite this, the stock has gained 6.23% since the beginning of the year, reflecting investor confidence in the company’s strategic direction and future growth prospects.
L&T Defence, a division of Larsen & Toubro, is a leading defense equipment manufacturer with a focus on cutting-edge technology and innovation. Specializing in a wide range of defense products, including guns, missiles, aerospace systems, and robotics, L&T Defence is known for its in-house developed technology and collaborations with DRDO.