By Rajesh Kurup
Buoyant on broad-based growth, L&T Technology Services (LTTS), a subsidiary of Larsen and Toubro, posted an 8.14% rise in the seasonally weak third-quarter, ahead of analyst estimates. The firm expects to sustain this growth in the fourth quarter too, its CEO and MD Amit Chadha told FE’s Rajesh Kurup in an interview. The technology and engineering services firm has already taken measures to contain rising attrition and is on track to achieve a $1 billion in revenue run rate in FY23, he says. Edited excerpts:
Q. LTTS posted an 8.14% rise in consolidated net profit compared with the September quarter on revenues of `1,687.5 crore and Ebitda of 18.63%. Where is the growth coming from?
In dollar terms, we recorded a 4.2% constant currency growth on a quarter-on-quarter (q-o-q) basis, which was 19.5% year-on-year (y-o-y), and three of our five verticals posted a broad-based growth of 4.5-5%. Our deal momentum also continued, and we signed a $45-million deal with a US-based auto major, while traction in the Electric Autonomous and Connected Vehicle (EACV) segment continues. All these helped us post a 34% y-o-y net profit growth.
Q. Do you expect to sustain this growth in Q4 too?
From Q2 of last fiscal year, we have consistently maintained a 4% organic growth and that would be our goal and ambition going forward. We are focusing on areas such as EACV, 5G, med-tech, artificial intelligence and digital products, digital manufacturing and sustainability. Digital engineering now accounts for 56% of our revenues, telecom and medical are catching on. So, I am confident of sustaining this growth.
Q. LTTS has been on a hiring spree since Q1…
We had added 1,100 trainees in Q1 and Q2, and another 1,900 in Q3. While we would add some more employees in Q4, we will hire a similar number in the next fiscal too. Our goal is to promote people and also hire laterally, and we will provide career progression and upskilling to our employees. We will be setting up an R&D centre in Krakow, Poland, for the US auto company, for which we will be recruiting more than 300 people in the next three years.
Q. Your attrition has also been rising?
We were at 16.5% trailing 12 months and now have gone up to 17.5%. We are running certain programmes, correcting some salaries, offering career progression and digital upskilling among others to contain attrition. We should be able to reduce attrition by Q4, and beyond that, it should stabilise.
Q. On your earlier guidance of reaching $1 billion in revenue run rate by FY23. Are you on track?
Yes, we are on track to getting to a $1 billion in revenue run rate by Q2 or Q3 of FY23. We have already hit the $900 million run rate, and we believe that getting to a billion-dollar from here is already in sight.
Q. As of December end, LTTS patents filings stood at 816. Which are the fields these patents are filed?
We filed 25 patents in the last quarter itself, taking the total to 73 in FY22. We were filing almost 25 patents each in every quarter of the current fiscal, and this compares with the total number of patents filed for the whole of FY21. The patents filed are broad across Artificial Intelligence-based platforms AiKno and Chest rAI, building management, electric vehicle and med-tech.
Q. LTTS was looking to acquire licences and spectrum for 5G testing? What’s the update?
We have got licences for certain spectrum, and certain others you don’t need one. We have been able to start the test cases, especially for medical devices. For the safety plant, we are waiting for the final spectrum to be awarded. We have set up a test lab in Bengaluru, and a 5G use case lab in Dallas (the US). We have also signed a deal with Mavenir and NVIDIA, to set up a 5G lab in Munich, Germany.
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