Mumbai based engineering and construction conglomerate Larsen & Toubro (L&T) has transferred its digital transformation business, L&T-NxT, to its technology consulting and services subsidiary Mindtree.
The transaction involves a cash consideration of Rs 198 crore including earnouts, subject to adjustments as per terms of the business transfer agreement, said regulatory filings by Mindtree on Thursday. The transaction is will be completed by July 31, 2021.
L&T is also the holding company of Bengaluru Mindtree in which it owns 61.03% stake. L&T took over Mindtree in April 2019, in what was termed by co-founders of Mindtree as a hostile takeover then.
The acquisition of L&T’s NxT Digital Business will add capabilities in Internet of Things (IoT) and Industry 4.0, Mindtree said as part of the filings.
The Nxt Digital Business was formally set up by L&T in 2018-19 and registered revenues of Rs 37.59 crore for the financial year 2020-21. It provides solutions for sectors including engineering and construction, manufacturing, energy and utilities as well as transportation and logistics.
“Industrial and manufacturing companies are starting to adopt digital technologies across the value chain, but need a partner with expertise to strategically connect the dots and generate business value from their data,” said Debashis Chatterjee, CEO and managing director of Mindtree in a statement issued by the company.
He added, “The acquisition will complement our significant strengths in reimagining consumer experience, positioning us as one of the leading partners for leveraging data and analytics to drive insights and deliver transformational services to our clients.”
The statement said Mindtree will leverage NxT Digital Business’ capabilities across segments in integrating sensors and telemetry data with its advanced data analytics to drive digitization across manufacturing and engineering.
“There is a huge opportunity ahead as global manufacturers and industrial companies are increasingly adopting Industry 4.0 focused smart solutions, systems, and processes, but are struggling to leverage data and analytics to drive efficiency and competitive advantage,” said SN Subrahmanyan, CEO and managing director of L&T.
In April, Mindtree reported a consolidated net profit of Rs 317.3 crore for the fourth quarter of financial year 2020-21, ending March 31, 2021. This was a 53.4% growth over the corresponding quarter in the previous year. The company’s revenue from operations grew 3% year-on-year to Rs 2,109.3 crore for the quarter. Technology, media and communications contributed nearly half of the company’s revenues for the quarter, followed by retail, consumer packaged goods and manufacturing.
This year, Mindtree signed on UPC Insurance, German gypsum board maker Knauf and insurance company Aflac to power their digital transformation.