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Engineering and cements conglomerate Larsen & Toubro (L&T) is planning to set up a holding company to manage infrastructure projects, including power, currently executed through separate special purpose vehicles (SPVs).
The holding company will be created with very low initial investment and L&T will invite financial institutions to invest in the company.
In his `Vision 2005', L&T chief executive officer and managing director A M Naik indicated that "for employing the working capital of the company efficiently, it will set up a holding company instead of putting money in each and every SPV for infrastructure and power projects."
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The company will henceforth route all the SPVs through the holding entity. The SPVs are expected to be subsidiaries of this holding company.
L&T has so far set up several SPVs for the infrastructure projects. Some of its existing SPVs include L&T Transportation Infrastructure Ltd for setting up a 28-km bypass road in Coimbatore along with an additional two-lane bridge across river Noyyal at Athupalam. Another SPV, Narmada Infrastructure Construction Enterprise Ltd, is for a bridge over Narmada at Zadeshwar in Gujarat, while HPL Cogeneration Ltd is for setting up a 116 mw naphtha-fired combined cycle captive power plant for Haldia Petrochemicals Ltd in West Bengal.