L&T Looks to Make Hyderabad Metro Project Attractive for Investment from Potential Buyers in 2-3 Years
October 31, 2022 at 03:43 pm
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Larsen & Toubro Limited (BSE:500510) which intends to exit from the Hyderabad Metro project, is working on steps such as reorganizing the project's capital structure in a staged manner spanning 2-3 years, in order to make the
asset attractive to prospective buyers, said Shankar Raman, Chief Financial Officer, Larsen & Toubro. As part of its five year strategic plan `Lakshya 26' the company is looking to divest its investment in few non-core areas, which includes road and power concessions business as well as capital restructuring and minimising its stake in Hyderabad Metro Rail Limited, operated by L&T Metro Rail (Hyderabad) Ltd. L&T currently holds 90% stake in the metro project with the remaining held by the Telangana Government and plans to bring down its stake 51% in the near term. ".the (Hyderabad Metro) divestment is not going to be a single step effort. The concession agreement provides for some staged divestment, and then we need to go from 100% holding to a 51% holding, to a 26% holding," said Raman in a conference call with journalists post release of L&T's consolidated results for Jul-Sep.
Larsen & Toubro Limited is a diversified group. Net sales (not including sold divisions) break down by activity as follows:
- engineering and construction services (68.5%): implementation of turnkey projects of transportation, building, factories, engineering instruments, etc.;
- construction, installation and implementation of hydrocarbon exploration and production projects (17.2%);
- development of thermal power plants and manufacturing of energy production equipment (4.4%);
- manufacturing of aerospace and defense equipment and systems (3.2%);
- manufacturing of custom designed equipment and systems for core industries (2.7%): equipment and systems for the fertilizer, refining, petrochemical, chemical, oil and gas, thermal and nuclear energy industries;
- other (4%): manufacturing of industrial machines and products (industrial valves, welding machines, building equipment, etc.), production of concrete, real estate development, etc.
Net sales are distributed geographically as follows: India (80.1%), Saudi Arabia (3.6%), United Arab Emirates (2.2%), Qatar (2.1%), Kuwait (1.6%) and other (10.4%).