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Wednesday, Aug 25, 2004

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L&T looks overseas for low-cost facility

Ch. Prashanth Reddy

Hyderabad , Aug. 24

LARSEN & Toubro Ltd is currently looking for a low-cost manufacturing centre outside India, particularly China and Eastern Europe, for production of various kinds of machinery, according to the company's board member and President (Operations), Mr J.P. Nayak.

Mr Nayak told Business Line that L&T intended to increase the level of its international operations from the existing 16 per cent of its total business to 40 per cent in the next four to five years to sustain the company's growth rate of 20 per cent per annum. In this context, he said that L&T was likely to set up a manufacturing unit abroad in a couple of years.

The company's heavy engineering division manufactures and supplies highly critical precision process plant equipment and industrial machinery to varied industries such as fertiliser, refinery, petrochemical, chemical, oil & gas, power, aerospace, paper & pulp, steel and ports. The division also supplies rubber-processing machinery for the tyre industry and undertakes marketing of industrial valves and plastic processing machinery manufactured by L&T's joint venture companies.

Stating that L&T would be concentrating on engineering and information technology sectors in the coming years, Mr Nayak said that the company intended to emerge as a "very large" player in the IT sector.

Last fiscal, IT operations had contributed Rs 350 crore to the company's turnover. This year, itscontribution was expected to cross Rs 650 crore.

At present, he said, L&T has 60-odd business units, each having domain expertise which could be pooled. The company wanted to leverage this knowhow in setting up a manufacturing unit abroad.

Mr Nayak said that L&T was generally confining itself to very large valued infrastructure projects. As far as projects were concerned, the company's current order book position was to the tune of Rs 18,000 crore. The company's turnover last year was around Rs 10,000 crore, which was expected to go up by nearly 30 per cent in the current fiscal.

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