L&T bets $1 bn on inhouse forte to face Tata, Adani, Reliance in AI data centres
In an interview with MintL&T corporate center chairman Prashant Jain reiterated the advantage of L&T Group, which expects to increase its data center capacity to 200 MW from the current 32 megawatts (MW) by 2030.
“We are equipped to be a digital infrastructure provider that helps reach large enterprises. Ultimately, customers love L&T’s standalone platform offerings,” Jain said.
He said the company will look to consolidate its own customers under Vyoma, its data center business, and will also leverage existing corporate relationships that two technology outsourcing companies – LTIMindtree and L&T Technology Services (LTTS) – have built over the years.
Analysts largely agree, noting that given the capital-intensive nature of data centers, most conglomerates investing in data centers will likely look at strategic acquisitions to control operating costs.
Tighter in-house control of all phases of a data center’s operation will give its offering a cost advantage over other companies in this space (Adani, Reliance and Tata groups). As each nation hopes to build its own data centers, these conglomerates have stepped on the cutting edge of technology due to global demand for AI and anticipated demand for local technology infrastructure.
L&T on Wednesday announced that it has started building a new 40 MW data center in Navi Mumbai, Maharashtra. This is part of the company’s data center capacity and net capital expenditure plan of over 200 MW. ₹10,000 crore ($1.2 billion), chairman and chief financial officer R. Shankar Raman said while laying the foundation stone of the data center in Navi Mumbai.
On November 26, L&T renamed its cloud and data center business from L&T-Cloudfiniti to Vyoma. Seema Ambastha, the organization’s CEO at the time, said: Mint The company could have a net spend of $2.5-3 billion to build 300 MW of data center capacity over the next five years.
A year ago, L&T had acquired a 21% stake in local IT infrastructure company E2E Networks, which offers servers for both general purpose and AI-focused data centers. Jain confirmed that the latter will be one of the primary contributors to L&T’s data center hardware, which will give L&T a better cost-effectiveness in purchasing servers for its data centres.
Jain said the company is also considering developing its own renewable energy plants or outsourcing it to third-party power generation companies.
The company aims to use 75% renewable energy in its data centers.
L&T’s $1.2 billion data center bet looks conservative compared to its peers.
On October 9, Tata Consultancy Services, the biggest cash cow of India’s largest conglomerate Tata Sons, said it would build a 1GW data center with a total spend of $6.5 billion. On November 20, it raised $1 billion from US asset manager TPG for the data centre, which is expected to run on “high amounts of green energy”.
On October 14, Adani announced it would partner with Google in a $5 billion joint investment in its $15 billion AI data center. In its FY25 annual report, Adani said it will run its data center operations entirely on green energy.
On November 26, Reliance’s joint venture with US-based Brookfield Asset Management and Singapore’s Digital Realty also announced that its $11 billion 1GW data center, scheduled to be operational by 2030, will be entirely powered by green energy.
Analysts said L&T’s approach is in line with what is expected from conglomerates.
“Data centers represent a huge opportunity today and require major investments in land, power and other key resources, along with the know-how and comfort of working with government agencies,” said Naresh Singh, senior executive analyst at consulting firm Gartner. “For the best conglomerates, this is their familiar ground. To better consolidate businesses, many will look to acquire startups and gain full control over every part of a data center business.”
Jayanth Kolla, partner at technology consultancy firm Convergence Catalyst, said the cost advantage will be significant for companies like L&T. “All of these top conglomerates have worked on the ability to control every part of a business. Technology is an emerging space, but holding stakes in strategic companies will enable India’s largest conglomerates to have better control over the technology infrastructure supply chain,” he said. “But a lot will depend on how efficient a traditional conglomerate is in running a digital-native business, which requires vision. In the recent past, only Reliance’s bet on 5G internet through Jio has paid off because of its vision to invest in infrastructure for the future. For L&T, execution will be key.”
Gartner’s Singh added that it is difficult for the likes of Adani to gain experience in technology services, but Tata and L&T already have large companies specializing in outsourced technology contracts and these companies have an advantage in making large investments in data centres. With its presence in Reliance Intelligence, Reliance may also find an advantage in the AI axis.
