L&T’s defence arm to diversify into civil projects to optimise asset utilisation
₹40,000 crore in annual defence exports by 2026, he said. “We cannot get qualified for more naval defence exports until we get more contracts from the Indian government that can act as a reference for us to export," he said. Similarly, the company’s facilities for making 100 units of 52-calibre self-propelled gun systems has been under-utilised after executing the order it received in 2018, Naik said.
The company will be utilising these facilities for other applications while it awaits more orders, but it would not be optimal, he said. “For 28 years we had no Bofors-type gun in the country, until L&T made it. Now everybody knows L&T as a high-tech company," Naik said.
“But my view is that it is still not known to the extent it should be." Defence contracts accounted for around 2% of the company’s total revenue last fiscal and Naik expects the share of defence in the company's total topline to go up further in the ongoing financial year. Analysts at Jefferies expect India’s defence expenditure to continue at the 7-8% compounded annual growth rate, as seen in the last decade. Meanwhile, the government’s indigenisation focus will drive double-digit growth in domestic defence spend, the Jefferies analysts noted.
Further, they expect India’s defence exports to rise to ₹58,000 crore ($7 billion) by FY30. “Some of the major export destinations for defence products have been Italy, Egypt, UAE, Bhutan, Ethiopia, Saudi Arabia among other countries," as per the Jefferies report. L&T shares closed 1.54% lower on the BSE on Friday at ₹ ₹3,741.65 apiece.
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