Larsen & Toubro (L&T) has announced a significant investment of ₹100 billion into its data center business, a strategic move under its 'Lakshya 2031' initiative. The conglomerate aims to establish approximately 200 megawatts (MW) of data center capacity across key Indian cities, including Vizag, Bengaluru, and Mumbai.
The primary focus of this expansion is to cater to global hyperscalers and advanced computing organizations, particularly those requiring AI-ready infrastructure and support for quantum computing. L&T's objective is to scale its data center operations through hyper-scale alliances, robust AI-ready facilities, and sovereign private cloud offerings.
R. Shankar Raman, President and Chief Financial Officer of L&T, emphasized the company's commitment to ensuring its data centers are AI-enabled with high-performance GPUs to facilitate intensive computing tasks. The 200 MW capacity will be developed in a modular fashion over time.
The company's data center arm, rebranded as Larsen & Toubro Vyoma, is already advancing its growth agenda. It recently commissioned a 12 MW facility in Kanchipuram, with an additional 6 MW in an advanced stage of commissioning. This brings L&T Vyoma's operational capacity to 30 MW, positioning it for its ambitious hyperscale expansion. Another 30 MW facility is currently under construction in Mahape.
L&T's Strategic Business Model
L&T is exploring various business and partnership models, including build-to-suit arrangements. This strategy involves collaboration with server chip and GPU suppliers, as well as direct engagement with end-users. An existing Memorandum of Understanding (MoU) with Nvidia underscores L&T's commitment to creating specialized capacity that attracts large organizations.
The company anticipates a return of approximately 13-14% at optimal operational levels, achieved through a blend of hyperscale and non-hyperscale clients. Raman noted that the returns will largely depend on the occupancy rates of the data centers. Currently, L&T is focused on curating the market, developing its supply chain, and constructing facilities from the ground up, with the full benefits of these investments expected to materialize within the 2031-2036 plan period.