Fis Seek Greater Role In L & T Affairs
Shareholders permission sought for Rs 290cr investments
Financial institutions are seeking to play a greater role in the affairs of the Rs 5,387.74 crore engineering major, Larsen & Toubro, (L&T), by increasing their representation on the company's board.
Currently at three, the FI representation on L&T board will rise to four with the induction of P M Venkatasubramaniam, nominee of General Insurance Corporation (GIC). Venkatasubramaniam was appointed additional director on May 16, 1997 and he will be confirmed whole-time director in L&T's forthcoming annual general meeting on August 1.
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Consequently, the company's board strength will also increase to 18 from 17. FIs hold more than 30 per cent of L&T's equity. Other FI nominees include those from Industrial Development Bank of India, (IDBI) and Unit Trust of India, (UTI).
The move assumes significance in the backdrop of a new found assertiveness on the part of FIs to play a greater role in the affairs of companies, where they control more than 30 per cent.
The FIs may also have been emboldened by recent signals from the finance ministry that they should concentrate more on companies in which they have a stake of 26 per cent or more. This message was conveyed to the FIs at a meeting they had with finance secretary, Montek Singh Ahluwalia in New Delhi last week.
L&T shareholders on August 1 this year will also vote on the re-appointment of three other directors, Anil Ambani, Mukesh Ambani and M L Bhakta.
In addition, the company will seek shareholder permission for investing nearly Rs 290 crore in various ventures. In the proposed venture for earthmoving equipment with Komatsu Corporation of Japan, L&T plans to invest Rs 60 crore in an equity of Rs 120 crore. It also plans to invest Rs 30 crore in a new special purpose vehicle called Narmada Infrastructure Const-ruction Enterprise Ltd, formed to implement the Rs 120 crore Narmada bridge contract the company was awarded recently. The company has also sought shareholder permission for investing around Rs 200 crore in various infrastructure projects which it plans to implement either on BOO or BOOT basis.
Regarding the board-level appointments, top L&T sources said GIC asked for appointing a nominee and have been accommodated. Venkatasubramaniam was appointed additional director on May 16, 1997. As per the Companies Act, he can hold office only until the date of the forthcoming AGM. Other institutions have also reshuffled their nominees. IDBI has appointed P S Subramanyam, executive director on the board in place of A G Karkhanis, who quit from January 3, 1997.
UTI's nominee, S M Palia, resigned from December 1996 and has been replaced by K U Mada, who was appointed additional director on March 27, 1997. His appointment will also be confirmed in the forthcoming AGM.