The Telegraph
Since 1st March, 1999
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L&T banks on core sector for growth

Mumbai, Aug. 22: Engineering major Larsen & Toubro Ltd (L&T) had its first date with shareholders today since the deal with the AV Birla group for the demerger of its cement business.

The 58th annual general meeting (AGM) was attended by Rajashree Birla and Kumar Mangalam Birla, both directors on L&T board.

The company expects a 20 per cent growth in business after the demerger of its cement unit. L&T has earmarked a capital expenditure of Rs 200 crore for the current fiscal.

“We anticipate a growth in infrastructural sectors, mainly that of roads, railways and construction, which would drive the growth of its engineering and construction division,” L&T board member S. S. Marathe, who chaired the AGM, said here today.

Most of the shareholders refrained from posing queries on the cement demerger as Marathe said that the right forum to discuss the issue would be the extra-ordinary general meeting to be convened for the purpose.

Briefing shareholders at the meeting, Marathe said that L&T will have a sharp focus on strategic initiatives in the areas of design and engineering, risk management practices and “HR interventions” to establish itself as an engineering and construction company of international repute.

During the year, revenues from engineering and construction business will grow by around 15 per cent, he added. Further, order booking is also expected to show a reasonable growth as sectors like hydrocarbon, oil and gas, petrochemicals, infrastructure hold good potential.

While cement industry is expected to maintain the growth rate of around 8-10 per cent, L&T’s other major division, electrical and electronics, is expected to gain from the accelerated power development programme and the new electricity law.

Commenting on the cement demerger issue, Marathe said that it would not only unlock shareholders’ value but also position the engineering business for focussed growth in future.

He further revealed that the final details of the scheme is being worked out for consideration and approval of the board of directors, following which shareholders and High Court approval would be sought.

Marathe, who is a director on L&T board, said that in the previous year the company brought about a reduction of around Rs 300 crore of borrowings. Interest costs were also reduced by Rs 139 crore through retiring/refinancing high-cost debt.

At the meeting L&T shareholders paid tributes to co-founder, late H. Holck Larsen. He passed away last month.

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