L&T plans to combine divisions

L&T plans to combine divisions
Published: 08 June 2004

Engineering and construction giant Larsen & Toubro will be integrating its engineering construction and contracts (ECC) division and its engineering and construction (E &C) business as part of a grand 5-year strategy to more than double its turnover from Rs 10,000 crore now to around Rs 25,000 crore by 2008-2009. At the same time, L&T is working towards positioning itself as a global brand and has also earmarked Rs 500 crore this year for overseas acquisitions.

The company has decided to almost treble its ready mix concrete (RMC) capacity by increasing the number of rmc plants to 84 from the current 27. L&T has short listed the Boston Consulting Group (BCG) and McKinsey & Co to draw up a strategy for growth. A final call on the management consultant is to be taken shortly.

BCG had submitted L&T’s previous 5-year plan. This had suggested, among other things, the de-merger of the cement business. L&T’s ECC and E&C divisions will jointly contribute a turnover of Rs 17,000-20,000 crore by 2008-2009, or around 75 per cent of the overall business. Its ECC division (excluding international business) currently accounts for around Rs 6,500 crore and is expected to reach a turnover of Rs 12,000 crore by 2008.

The turnover of the international operations of the ECC division is expected to more than double to Rs 2,400 crore from Rs 1,000 crore. L&T’s Rs 1,000 crore electrical and electronics business is expected to grow to around Rs 3,000 crore and its defence equipment sales are expected to touch Rs 1,000 crore from the present Rs 250 crore.