Larsen & Toubro plans $2 bn splash on data centres

Larsen & Toubro has plans to invest up to $2 billion in its data centre business and its immediate target is to expand its data centre capacity by five times and take it to 150 MW by 2027.

It currently has around 32 MW existing capacity, with two data centres in Mumbai and Chennai. In Chennai, the company has a huge land parcel of 300 acres, and it has carved out about 30 acres for the data centre business, Seema Ambastha, Chief Executive of L&T Cloudfiniti said.

The capacity additions will be carried out at Mahape, Panvel and Bengaluru. The data centre in Chennai went live around six months ago.

“Data centre is an opportunity that companies like L&T must address… with totally sovereign, made in India products,” said Ambastha in an interaction.

While there are several large players such as Blackstone, CapitaLand, Reliance Industries, Adani Group, who have ambitious investments in the sector, Ambastha said the number of players in the segment did not bother them. “If we build the right product at the right time, I think we’ll have a market to really monetise.”

Expansion plans

While Chennai has a huge potential for expansion, L&T’s data centre arm plans to set up 30 MW data centre in Panvel, where it has a 7-acres land parcel.

In Bengaluru and Mahape in Navi Mumbai, capacities of 30 MW each are coming up, she said.

At Chennai, around 8 MW capacity was already leased out, while the remaining capacity is under discussion for leases.

Lease rentals

Ambastha said that lease rentals in data centres had come down. “Per kW rates have stabilized, between $60-70,000 per kW. And then in some cases where there’s a little higher supply, you will see pressure on rates,” she said.

“What we do is we need to keep the capital cost under control, extremely well monitored. Do as much optimization as possible, including energy cost and make sure that the returns don’t get hurt,” she added.

The company is also open to special purpose joint ventures. “We are open to that,” she said, adding that they were in discussions with some potential JV partners who were looking to enter India.