Larsen & Toubro (L&T) plans to bring in partners in various infrastructure projects through sale of equity, the engineering and construction company's Chairman and Managing Director A M Naik has said.
"... Company has built a significant portfolio of assets covering concessions, mainly in roads, ports, power generation and metro rail. The majority of projects are in various stages of completion," Naik said in a letter to the shareholders.
"While returns on developmental projects are typically back-ended, your company would be seeking to unlock value through churning of mature assets within the portfolio and through equity partnership," he added.
Naik, however, did neither identify the projects where stakes would be diluted nor the amount the company was hoping to mop up through the process.
Meanwhile, L&T Infrastructure Development Projects (L&T IDPL), a subsidiary of the parent company that functions as the infrastructure development arm of the group, was earlier proposed to be listed.
L&T had also mulled sale of minority stake in L&T IDPL through placement of private equity, but now the plans have shifted to equity dilution in individual projects, rather than in IDPL. L&T has 97.45% stake in IDPL.
IDPL has a diversified portfolio with a mix of projects under development across various sectors, such as roads and bridges, ports and metro rail.
The company has at least eight operational road projects, but five of them had incurred loss in the last last fiscal. IDPL is also developing eight additional road projects involving Rs 10,379 crore investment.
IDPL has also developed two ports, including one in equal joint venture with Tata Steel in Odisha. The Dhamra Port had reported Rs 198 crore total income in 2011-2012 with a net loss of Rs 458 crore.
The Hyderabad metro rail project, which L&T IDPL is now implementing through a subsidiary with Rs 14,917 crore outlay, could also be a potential disinvestment candidate for L&T.
L&T is also developing six power projects with a total capacity of 2,828 MW.
The offloading of stake could be aimed at both reducing the portfolio size of the company as well as generating funds that could be used as equity in new projects.
L&T Group had 128 subsidiaries, 18 associates and 14 joint venture companies under its umbrella, as on March 31, 2012.
L&T's order-book size is quite healthy. With the inflow of Rs 70,574 crore orders in 2011-12, its unexecuted order book position increased to an all-time high at Rs 145,723 crore, as on march 31, 2012. International orders accounted for 18 per cent of the full year's inflow.
At the group level, the company had recorded net revenues of Rs 64,313 crore, an increase of 24 per cent over FY2010-11. Consolidated profit rose to Rs 4,649 crore last fiscal.