L&T to expand financial services business

Larsen & Toubro (L&T) is looking to expand its financial services business and hopes to have a presence in each and every segment, J P Nayak, president (machinery and industrial products), said here today.

“I think we have plans for expanding our financial services business. That will take place at appropriate time,” he said. On whether the company has plans to foray into real estate mutual funds business, Nayak said, “We will be keen on taking part in each and every single opportunity which takes place. We will eventually participate in all segments.”

He was speaking on the sidelines of a press meet to announce details of ‘BuildArch 2008 and Build Up 2008’ exhibitions to be held here from October 21-24. The two events would showcase the latest technology available in construction, real estate development, building materials, and property investments.

Nayak said L&T would set up a separate company for its financial services’ business venture. Currently, L&T offers infrastructure finance through its arm L&T Infrastructure Finance.

Another subsidiary — L&T Finance — provides lease, hire-purchase term loans and other financing facilities mainly to corporate products, construction equipment and tractors. In spite of the current blip in real estate sector, Nayak was optimistic about its growth prospects.

“It (slowdown in real estate sector) is temporary. We are right now going through a down phase. That does not mean it will remain like that for long,” he said. “Even if there is 7 per cent economic growth, there will be huge growth in real estate. But the growth seen in last two years would come down,” Nayak said.

L&T expects to bag more equipment manufacturing orders from Brazil, Nayak said without giving further details.

The company also hopes to expand its business in South Africa, he said. For July-September, international sales contributed 19 per cent of the total sales of Rs 76.8 billion. Nayak also said the company hopes to maintain operating margins at current levels. “I don’t think we can keep on improving margins. There are cost pressures. We hope to maintain margins at current levels.”

On Wednesday, the engineering major reported a 32.3 per cent year-on-year rise in net profit at Rs 4.60 billion in July-September compared with estimated Rs 502 crore, as margins succumbed to rising costs.