The L&T Nxt initiative, which was launched last week, will focus on the areas of artificial intelligence, internet of things (IoT), virtual reality, augmented reality, geospatial solutions as well as cybersecurity.
The announcement came at a time when L&T has made an offer to buy up to 66 per cent stake in IT firm Mindtree for around Rs 10,800 crore. It has entered into a deal to buy Cafe Coffee Day owner V G Siddhartha's 20.32 per cent share in Mindtree and has also placed an order with brokers to pick up another 15 per cent of the company shares from the open market.
"This is more like a start-up ... this is more of an initiative going into outside market. Many of our initiatives have resulted in success stories. We will be looking at beyond a billion dollars in five years to seven years span," Larsen & Toubro's Senior Executive Vice-President (Defence Business) and member of the board J D Patil told the media.
Patil said L&T Nxt is being taken to the market after pursuing the initiative in-house for quite some time with an idea to help its clientele and customers, and the hope of some of the kind of unthinkable success stories.
"As of today, we can look at a couple of 100 million dollars to start with and then one would want to keep on honing it when one moves upward," the official said.
"We are committing significant investments and talent into this strategic effort and are confident that this will be an enabler for business," S N Subrahmanyan, CEO and MD, L&T, had said at the launch of L&T Nxt.
The firm will focus on the core areas of business through 64 of the company's domain verticals across industry, Patil noted.
"Now, obviously we have built good amount of skills which today has been limited to the point of customers visiting to us for designs to their need... we now will be relating to customers ... obviously from design to building -- one can create huge amount of value addition through digital," the official said.
Utilising the skills from the IT space and initiatives has resulted in better productivity and performance from the assets, he added.
"So, exactly this is the idea whether it is a plant, it is a factory or it is a kind of a control centre...equipment... one can build up to make it internet ready," he said, adding that with data, analysis and artificial intelligence software, the firm will create value for the company as well as its customers.
Asked about the geographies it will focus on, Patil said the company will choose initially the countries and areas where it is already doing business like the US, Europe and the South-East region.
"Obviously, we will choose initially to some extent the adjoining countries where we today are doing businesses, where we have our own existing offices and our networks which obviously turns out to be the US, Europe and South East region but I won't say it will be restricted to any given region as a multinational," the official added.
On how much investments the company has put in the venture, Patil said it was hard to quantify as till now it has been more of in-house project with investments done in places, people, infrastructure, building blocks over a couple of years.
He also said the era of cyber-physical systems is just beginning.
"With the lines between the physical and digital blurring, Industry 4.0 is being founded," he said, adding that "we see new technology businesses and sunrise enterprises as prime constituents with the latent upside for rapid and substantial value creation".
The company on March 29, while announcing L&T Nxt, had said it has been identified as a select initiative in L&T's five-year strategic plan.
The initiative is ideally placed to capitalise on the huge emerging opportunities with its large palette spanning software to hardcore engineering, backed by a strong technology base, it said.
The company has deployed IoT, analytics and AI in the industrial sector by converting most operational matters online like finance, human resources, labour, plant, and material into smart, affordable and efficient solutions.
Larsen & Toubro is an Indian multi-national firm engaged in technology, engineering, construction, manufacturing and financial services with over $18 billion in revenue. It operates in over 30 countries worldwide.