Mumbai: Larsen & Toubro (L&T), which on Thursday completed disinvestment of its cement-making arm, may follow up with strategic sales of other units such as those making medical equipment and petrol pump equipment, according to company and market sources.
"We have said that units that donot improve their performance will be disinvested. So it should not come as a surprise if we have more such announcements soon," said a senior L&T official, who did not wish to be named.
The company, which is into areas as diverse as information technology, defence, engineering and construction, has been trying to get out of many of its units, but had been held back by lack of buyer interest caused by the tight credit conditions in the market, an analyst tracking the Rs 34,000 crore firm said.
"The company is known to have put a few of its units, including medical equipment and petrol dispensing equipment, up for sale for some time now. But buyers have been hard to come by," an analyst said, requesting anonymity as he was not authorised to speak to the media.
AM Naik, chairman and managing director of L&T, however, refused to comment on possible disinvestments, when contacted by DNA.
The engineering and construction major wrapped up divestment of the cement unit, whose reins it had handed over to the Aditya Birla group's Grasim Industries in 2004, on Thursday.
It sold its entire 11.49% stake in UltraTech cement at an average price of Rs 725 per share, raising around Rs 1,037 crore.
L&T was bound, under and agreement with Grasim Industries, to exit the cement unit completely by the end of 2009.
L&T, which posted a net profit of Rs 3,480 crore for the last financial year, has a total debt of around Rs 6,500 crore. It is also engaged in a multi-year investment programme totaling around Rs 5,000 crore, including around Rs 2,000 crore this year.
Though the company did not disclose its cash reserves during its results announcement last month, analysts did not see the divestments as a way of raising cash.
"These are not likely to have an impact on the overall L&T scheme of things," another stock analyst said.
A company official said while the money raised through disinvestment will be pumped into capital expenditure, L&T is not dependent on such a move to fund its expansion.
"If the cash is already there, we will obviously not raise it from anywhere else," he said.
Friday, June 12, 2009
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