L&T Plans Major Restructuring

A massive reengineering is underway at Larsen & Toubro, India''s premier engineering company, as it gears up to tap bigger opportunities. AM Naik - the CMD of L&T, is getting ready for his biggest ever challenge to turn the engineering behemoth into focussed corporate entities, which could eventually be listed in the stock markets. Sources say that L&T may be broken up into 4-5 companies and the company''s top brass is evaluating value creation through a split. The operating companies are likely to be listed as separate entities. L&T''s top brass maintains that recast blueprint will be taken up in its vision document Lakshya 2, which will lay down the 5-year roadmap post 2010.

As a first step L&T is creating 12 verticals comprising core businesses of engineering, construction and electricals businesses, which will function as operating companies from next month. The verticals will function as independent companies with functions like finance, HR vested on its board. It will only fall short of being separately listed. The company management says a final decision on the restructuring will be taken only if it is convinced that L&T can command a conglomeration premium by listing its verticals separately. But for the moment the focus is clearly on making these verticals function like independent corporate entities just short of being separately listed.