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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (9255)	11/1/1999 10:37:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

L&T may offer stake in cement arm to shareholders larsentoubro.com ltitl.com (Tuesday, November 2, 1999) Baiju Kalesh in Mumbai Larsen & Toubro (L&T) is considering to proportionately offer shares of the proposed cement company to its existing shareholders. L&T, the country?s largest cement producer with 12 million tonnes per annum capacity is exploring the possibility of hiving off its cement division into a separate company. Speaking to Business Standard, a senior L&T official said, ?we will offer the shares in the cement firm to our existing shareholders for which a thought process is on?. However, the company will take a decision on the matter only after Boston Consulting Group (BCG) submits its report, the official added. L&T has roped in BCG to chart out future strategies and restructure its business operations. The consultants are expected to submit their report within two months. Institutions are the largest stake holders in L&T with 32.02 per cent equity while Reliance Industries Ltd (RIL) holds around 9 per cent. The other shareholders include Mutual Funds with 1.43 per cent, foreign institutional investors 11.43 per cent, Global Depository Holders 11.47 per cent, domestic companies 8.5 per cent and the rest with public. According to senior company officials, the proportionate distribution is part of unlocking the hidden value of the cement division which contributes 28 per cent to the company?s turnover of Rs 7,200 crore. Sources said "The Ambanis and financial institutions are in favour of the shareholders receiving their proportionate value in the cement division which is a major revenue earner for the company." The financial institution and Ambanis also favour a joint venture with a domestic cement major rather than a foreign company, sources involved with the plan said. The thought process focuses around divesting 48 per cent to the existing shareholders, 26 per cent to a strategic partner and rest with L&T. While financial institutions are yet to take a decision on the matter, sources said they favour the proposal as it adds value to L&T shareholders. Meanwhile on the performance front, the company has reported a 40 per cent rise in cement sales to Rs 925 crore during the first half of the current fiscal up from the previous Rs 658 crore. The company during the first half of the current fiscal 1999-00 has undertaken a cost reduction by 17 per cent mainly on the power front. The sales realisation has gone up by 5 per cent during the period.