L&T Expands Data Center Capacity with New Developments in India

Larsen & Toubro (L&T), a prominent player in the engineering and construction sector, is making significant strides in the data center landscape. The company is in the process of establishing new data centers in Panvel and Mhape, both of which are situated near Mumbai, as well as in Bangalore. Collectively, these facilities will boast a substantial capacity of 90 megawatts (MW), further solidifying L&T’s position in the digital infrastructure market.

Current Capacity and Market Demand

Currently, L&T operates data centers with a combined capacity of 32 MW in locations such as Chennai and Panvel. During a recent media briefing, Seema Ambastha, the CEO of L&T Cloudfiniti, highlighted that the 8 MW capacity in Chennai is fully booked and ready to go live, while 2 MW in Panvel has also reached its leasing capacity.

• Chennai: 8 MW sold out and operational.
• Panvel: 2 MW fully leased.
• Current total capacity: 32 MW across Chennai and Panvel.

Leasing Agreements and Investment Insights

Ambastha noted that typical lease agreements for data centers range from 3 to 5 years, whereas built-to-suit (BTS) contracts can extend from 15 to 20 years. She emphasized the need for substantial investment in various areas such as land, civil works, mechanical, electrical, and plumbing (MEP) systems, along with operational costs.

For a Tier-III data center, the estimated investment is around ₹30-40 crore per MW, and cities like Mumbai show minimal fluctuations in costs. L&T is poised to invest approximately ₹3,600 crore in these new developments.

Navigating Competition and Market Growth

When discussing new entrants like Blackstone and Hiranandani in the data center space, Ambastha expressed confidence in the market’s growth potential, stating that there is ample demand to accommodate all players.

• Key Takeaways:
  • The data center market is not limited by the number of competitors.
  • Demand remains robust, provided companies build products that meet market needs.

Ambastha pointed out the rapid expansion in sectors such as digital services, artificial intelligence (AI), and cloud storage, urging service providers to align their offerings with this growth.

Future Funding and Strategic Partnerships

On the topic of funding for expansion, Ambastha assured that L&T’s financial resources are sufficient to meet capital requirements. However, she did not dismiss the possibility of entering into joint ventures with private equity firms through special purpose vehicles (SPVs) to cater to specific client needs.

• Investment Strategy:
  • No immediate necessity for leveraging debt.
  • Funding primarily sourced from L&T’s corporate structure.

In conclusion, L&T’s strategic expansion into data centers reflects a keen awareness of the evolving digital landscape in India, positioning the company as a formidable player in providing bespoke solutions tailored to current market demands. With a focus on innovation and growth, L&T is set to redefine the data center experience in the region.