The Hindu Business Line : 2 MNCs in race for L&T glass container business

THE board of directors of Larsen & Toubro on Tuesday gave its approval for divestment of the company's glass container division on a going concern basis; an extraordinary general meeting is to be convened for this purpose on February 3, 2004.

There are two "non-multinational" contenders for the business, both of whom are conducting due diligence and it is expected that the transaction will be consummated by the end of the fiscal year, said Mr A.M. Naik, Managing Director and CEO, after the board meeting here on Tuesday.

A ball park figure of "under Rs 100 crore" is expected from the sale, he said.

Mr Naik said this divestment, as well as the demerger and planned sale of the cement division to Grasim, is in keeping with the Boston Consulting Group's advice to the company to exit from all its non-core areas. Mr Naik described the core areas of the company as construction, projects, heavy engineering, machinery; then electronics and electricals, information technology and information technology enabled services. "IT is a growth area for us," he said.

"We have divested almost all our non-core businesses," he said.

The BSG plan which was drawn up for till the year 2005 is likely to be followed by another five-year plan for L&T for up to year 2009-2010, said Mr Naik.

"We have not decided whether we will do it alone or seek the help of a consultant," he said.

The Bangalore International Airport project (in which L&T is part of a consortium which has 74 per cent stake along with Siemens and Zurich Airport) will achieve financial closure in January-February, said Mr Naik.

The other shareholders are the Karnataka Government and Airports Authority of India.

The formalities and agreements for the project are in place as well as the Cabinet committee approval. "We will now be setting a precedent for other airport projects," he said.

Voluntary contribution to the L&T employees' trust, which has been set up to buy shares of L&T from Grasim in the demerger deal would amount to between Rs 12 crore and Rs 15 crore annually, he said.

He said the response from employees was encouraging, given the fact that only 5 per cent return was guaranteed them, this being less than what they would get out of pension, said Mr Naik.

He attributed this to the "emotional bond" the employees had for the company.

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