L&T to spin off four entities in two years

The ECC would be divided into four separate entities; building and factories division, infrastructure, power transmission and distribution and metallurgical materials handling and water, according to J Ganguly, executive vice president, corporate, ECC, L&T. We are waiting for the joint revenues of the ECC division to touch Rs 20,000 crore before the division could be legally separated, Ganguly added.

 

ECC doubled its revenues in the last two years to Rs 13,000 crore in FY08. It reported a turnover of Rs 9500 crore in 2006-07 and L&T was eyeing Rs 18,000 crore by the end of this financial year, Ganguly said.

The functional restructuring was likely to be complete this year. L&T would wait till the ECC division reached a critical mass of around $1.5 billion, with each division registering average turnover of Rs 5,000 crore and above, before registering them as separate companies.

ECC would initially be the holding company for the four subsidiaries and L&T might subsequently become the holding company, Ganguly explained. The divisions will then be called L&T Infrastructure, L&T Power Transmission and so on, he added.

The ECC division contributes nearly 50 per cent of L&T's revenues. It started around 64 years back as a wholly owned subsidiary of L&T.

Boston Consulting Group (BCG) was roped in way back in 1999 to work on L&T's restructuring initiatives, Ganguly said.