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Our Infrastructure Bureau
Mumbai, Aug 6: Larsen & Toubro views itself as a long-term player in cement and is not in the business for mere short-term gains, the company's director SS Marathe announced at the company's 53rd annual general meeting here on Thursday. This was in response to shareholders' queries on the need for increasing capacity in cement.
Marathe, who chaired the AGM, said that L&T had planned this expansion with a view to becoming one of the major players in cement. He said that per capita consumption of cement in India was a mere 80 kilograms compared to China's 500 kg and even Sri Lanka which was three times more. "In a country of over 900 million people, there is enormous potential and this is why L&T views cement as a key component for its business," he said.
According to Marathe, the company had certain advantages in its cement operations. For one thing, its main plants were situated in the western and northern regions of the country which presently have a shortage of locally produced cement. Two, more than 70per cent of L&T's project cost for cement is accounted for by inhouse supplies, he added.
"We have a natural synergy as we also produce cement machinery. All our plants are the cheapest and these are the advantages we are banking on," Marathe said. He indicated that along with cement, the company would focus on its key core business of EPC (engineering, procurement and construction) and construction which contribute to around 85 per cent of turnover. "We would like to be pre-eminent in these fields not only in India but also strive for world standards," Marathe told shareholders.
On the proposed tractor business, he said that L&T had tied up with John Deere of the US in a 50:50 joint venture which would see 30,000 tractors manufactured in the year 2000. The investment for the first phase would be Rs 342 crore and a similar sum had been earmarked for the second phase. The tractor plant would be located near Pune, he added.
Marathe maintained that it was important for the company to focus on key areas of Mumbai, Aug 6: Larsen & Toubro views itself as a long-term player in cement and is not in the business for mere short-term gains, the company's director SS Marathe announced at the company's 53rd annual general meeting here on Thursday. This was in response to shareholders' queries on the need for increasing capacity in cement.
Marathe, who chaired the AGM, said that L&T had planned this expansion with a view to becoming one of the major players in cement. He said that per capita consumption of cement in India was a mere 80 kilograms compared to China's 500 kg and even Sri Lanka which was three times more. "In a country of over 900 million people, there is enormous potential and this is why L&T views cement as a key component for its business," he said.
According to Marathe, the company had certain advantages in its cement operations. For one thing, its main plants were situated in the western and northern regions of the country which presently have a shortage of locally produced cement. Two, more than 70per cent of L&T's project cost for cement is accounted for by inhouse supplies, he added.
"We have a natural synergy as we also produce cement machinery. All our plants are the cheapest and these are the advantages we are banking on," Marathe said. He indicated that along with cement, the company would focus on its key core business of EPC (engineering, procurement and construction) and construction which contribute to around 85 per cent of turnover. "We would like to be pre-eminent in these fields not only in India but also strive for world standards," Marathe told shareholders.
On the proposed tractor business, he said that L&T had tied up with John Deere of the US in a 50:50 joint venture which would see 30,000 tractors manufactured in the year 2000. The investment for the first phase would be Rs 342 crore and a similar sum had been earmarked for the second phase. The tractor plant would be located near Pune, he added.
Marathe maintained that it was important for the company to focus on key areas ofcompetence or ensure that there was enough expertise from world players in the building up process. Hence, the tieup with Deere for tractors and the decision to hive off the earthmoving equipment business as a 50:50 venture with Komatsu of Japan. Likewise, the move to sell the shipping business to an American company for $40 million stemmed from the fact that it had no synergies with the existing activities of the company.
Marathe said that L&T's interests in steel and aluminium was confined to the EPC portion and not direct manufacturing. He said the company was open to picking up a minority stake in these projects. As for oil and gas, Marathe said a small effort had begun in this direction with support on design and planning coming from L&T's Baroda centre.
A surprise visitor
There was a surprise visitor at L&T's AGM. Ole K Toubro, son of the co-founder of the company, Soren Toubro, sat through the meeting and it was Marathe who told the shareholders that they had an important person in theirmidst. Toubro later told The Financial Express that this was the first time that he had come to an AGM of L&T. "I am a frequent visitor to India and this time around created time to come to the meeting," he said. His father passed away 15 years ago but his partner, Holck-Larsen, chairman emeritus, was at the AGM. Toubro recalled his days in India and said that he had studied in Kodaikanal where his mother died a year ago.
"We have very strong ties with India and I keep coming here from time to time," he said. Toubro has settled down in Cedex, France, where he works with a drilling company, Lindqvist International SA.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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