The Hindu Business Line : L&T schedules first of 3 IPOs for 2009-10

More in line
Gears up for power production, coal mining.
To set up a Rs 2,000-cr shipbuilding yard at Ennore.
Plans to sharpen focus on operations in W. Asia, Gulf.

Our Bureau

Mumbai, May 29 Engineering and construction major Larsen & Toubro plans to go ahead with the first of the three proposed initial public offering of its group companies in 2009-10.

The company, which has a wide portfolio of operations ranging from manufacturing to software services, intends to tap the capital market for its information technology arm L&T Infotech, L&T Infrastructure Development Projects and its financial services business.

“It’s most likely that the first of the three to get listed will be our information technology arm,” Mr A.M. Naik, Chairman and Managing Director of the company, told presspersons here on Thursday. He said that the IT arm will get listed in 2009-10, depending on market conditions, and that there would be an IPO every year for the other two companies.

The company, meanwhile, is gearing up to expand its business canvas by getting into power production and coal mining, in expectation of a strong growth in the power sector for the next 10 years. Although coal mining will not constitute a full-fledged business, L&T plans to take up mining operations to feed its proposed power plants.

Shipbuilding plans

L&T is also betting big on shipbuilding, with plans to set up a Rs 2,000-crore integrated greenfield shipbuilding yard at Ennore, north of Chennai. “We have appointed an international consultant from Germany to advice us on the type of vessels that would be built at the shipyard. We are scheduled to have a meeting with them (the consultants) next week,” Mr Naik said. He expected the shipyard to start making ships from 2011.

He did not specify the type of ships that the company proposed to build at the shipyard, but made it clear that the yard would not make the conventional bulk carriers or tankers. The yard will instead focus on specialised vessels of above 1.5 lakh DWT.

The company currently operates a small shipbuilding yard at Hazira in Gujarat, with the current order book position being Rs 1,300 crore. “We are not taking fresh orders for the time being due to capacity constraints,” he said.

Capex programme

Mr Naik said the company has lined up a capital expenditure programme of about Rs 2,000 crore to expand its various facilities in the current fiscal.

The company plans to sharpen focus on its operations in West Asia and Gulf, as “there is scope for doing more there.” Also, its overseas operations would provide the company an opportunity for better risk management in the event of an economic slowdown in specific geographies.

The international order book position for its engineering and construction business stands at Rs 8,210 crore, accounting for about 16 per cent of the segment’s order book, which was in the region of Rs 50,931 crore as on March 31, 2008.

In the real estate sector, L&T is in the process of concluding agreements with two real estate developers to undertake construction projects. “Both the projects will involve an investment of over Rs 5,000 crore to be executed in five years,” Mr Naik said. The company has already concluded similar agreements with the Hiranandani and Oberoi groups.

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