Larsen & Toubro will split its Engineering Construction and Contract
(ECC) division into four separate companies soon, according to Mr J.
Ganguly, Executive Vice-President, L&T Ltd.
The four functional areas within ECC – Buildings & Factories,
Infrastructure, Power Transmission & Distribution and Mineral Metal &
Water – have already started operating as independent divisions with
effect from July 1, he said, adding that the formal split would take a
couple of years to be completed.
Listing plans
There are also plans to list them on the stock exchanges, once they
acquire "a critical mass" for getting registered as separate entities,
Mr Ganguly said.
"We are in the process of a major restructuring of ECC. The break-up
was inevitable because we had grown substantially over the last two
years," Mr Ganguly said.
Mr Ganguly said the four new divisions would operate as subsidiaries
or associate companies, ECC being the holding company for all the four
initially.
However, once the restructuring was complete, L&T would take over as
the holding company. The brand of L&T could thus be attached with each
division for nomenclature, he clarified.
In 2008-09, ECC has a target of achieving a turnover of Rs 18,000
crore, which is nearly double its turnover of Rs 9,500 crore in
2006-07.
"Each of the four divisions now contributes Rs 3,000-4,000 crore to
the company's exchequer and we would go for separate registration once
they grow to at least Rs 5,000 crore each," he said.
Last year, the construction major registered a turnover of Rs 13,000
crore, growing at 37 per cent over the previous fiscal.
According to industry sources, the ground for the restructuring
process, being conducted by the Boston Consulting Group (BCG), was
laid way back in 2003 when India's largest construction organization
ECC had regrouped its erstwhile complex model of 18 Strategic Business
Units (SBUs) into a four-business sector model that exists today.
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Source: Business Line
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