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Rs 500 crore L&T war chest for acquisitions
T R Vivek in New Delhi |
March 05, 2004 08:54 IST
Engineering major Larsen & Toubro has put together a war chest of nearly Rs 500 crore (over $100 million) to acquire turnkey project companies in the US and Europe over the next year.
"Raising money is not an issue for a company like L&T. There are plenty of acquisition opportunities and we will aggressively look for them," AM Naik, L&T's chairman & managing director, told Business Standard.
| On the prowl |
| Target mid-sized European and US turnkey project companies Stretch the Rs 500 crore war chest if needed Look for specialised, hi-tech projects in the E&C business |
The sum earmarked for acquisitions can go up if L&T comes across bigger companies that dovetail into its core engineering business. Company executives said L&T had identified several targets and was evaluating options.
In India, L&T plans to bid for the public sector engineering consultancy Engineers India Ltd when it is put up for sale.
"We are keen on Engineers India but its divestment ran into trouble after the Supreme Court verdict (on not privatising nationalised companies without clearance from Parliament)," Naik said.
L&T's attempt to take over the public sector Instrumentation Ltd's Palakkad unit for Rs 18 crore (Rs 180 million) has also run into resistance from employees.
"We are one of the biggest exporters of valves from the country and the unit will give us more volumes," Naik said.
Talking about a road map for L&T, Naik said by 2010, the company would become one of the world's leading high-tech engineering companies.
"We want to continuously acquire cutting-edge technical capabilities and enter newer areas in the high-tech sector," he added.
Turnkey hydroelectric power projects are a new area for L&T. In November 2003, the company bagged a Rs 950 crore (Rs 9.5 billion) contract from the National Hydroelectric Power Corporation for the 2,000 Mw Lower Subansiri project in Arunachal Pradesh.
According to Naik, all the eight special business units of L&T, including engineering and construction, information technology, and high-tech manufacturing, will continue to grow at over 20 per cent a year over the next five years.
He denied speculation that L&T was looking for a buyer for its Rs 75 crore (Rs 750 million) medical equipment business.
"The medical equipment that we make involves high technology, which is our core competence. We have just received US FDA approval for marketing our new patient monitoring systems in the US. This business will grow to Rs 250 crore (Rs 2.5 billion) in the next three years," he added.