L & T Rules Out Further Restructuring
Engineering and construction firm Larsen and Toubro Ltd (L&T) has no plans to restructure its businesses further, managing director Sudhakar Kulkarni said.
In a recent tie-up with Japans Komatsu Ltd, L&T spun off its earth-moving machinery division, sparking off speculation that this might be the first in a series.
But Kulkarni said that this step, on the contrary, was towards increasing competitveness. This is not a hiving off, except in the sense that a business which was run as a part of the company, a department of the company, is being restructured into a separate company as a joint venture with somebody else, Kulkarni said on Tuesday.
Kulkarni said L&T had come to the conclusion there was considerable potential for the earth-moving machinery division to grow, but volumes were too small to justify an intensive independent research and development effort.
If the infrastructure development takes place there will be need for construction equipment, Kulkarni said.
The only problem is with our volumes. We make 500 machines or so and we cannot afford to spend a lot of money on the development of machines, Kulkarni said.
Talking about L&Ts tie-up with Komatsu with each partner holding equal shares, he said the venture was essentially technology driven. In this area we felt that to be competitive in the long run, it was necessary for the company to have a technology tie-up, he said.(Reuter)
Kulkarni said L&T had no plans to spin off other successful divisions, but he did not rule out the possibility of similar future tie-ups. Each case will be examined separately, he said.
Different considerations prompted L&T to spin off its information technology division as a separate company, Kulkarni said. L&Ts reputation as an engineering firm had overshadowed the software divisions performance, he claimed.
L&T had an image as an engineering and construction company, so the outside world did not take our software activity very seriously, Kulkarni said.
The setting up of L&T Information Technology Ltd enabled the company to structure the division along the lines of other successful infotech firms, sharpening focus and raising its profile.