Meanwhile, the company has constituted eight high-level committees to review its entire business portfolio and also look at ways to improve operational efficiencies.

The committees, which comprise various departmental heads and in-house business specialists, is expected to submit their reports by the end of September, following which the company may hire a leading consultant to lend a global perspective to the findings.

"The whole exercise has been taken up with the objective of increasing shareholder value. A final decision on restructuring the business portfolio will be taken only around December,"said managing director and CEO AM Naik.

"We know that there is already a debate on whether the cement business and our engineering activities can co-exist. We will look at this aspect, but a final decision on whether to hive off the cement division will have to wait till we get the final report," Naik said.

According to Naik, a very strong task force has been set up review the company's infotech business. "We are confident that the infotech business will grow at least five-fold by 2004. The IT arm, we are hopeful, will generate business worth Rs 1,000 crore over the next five years," Naik said. L&T Infotech had a turnover of Rs 160 crore last year.

On the result front, despite a slowdown in the economy, the company booked orders worth Rs 7,290 crore, an increase of 9 per cent over the previous year. During the current fiscal, the company is aiming to bag orders worth Rs 10,000 crore.

During the fiscal, the company sold its shipping fleet for $40 million, resulting in an extra-ordinary profit of Rs 81crore. Other income increased to Rs 110.06 crore from Rs 91.58 crore in 1997-98.

Interest charges jumped to Rs 160.66 crore from Rs 74.34 crore, while depreciation shot up to Rs 268.14 crore from Rs 210.27 crore in the preceeding fiscal. Higher interest and depreciation charges were due to the commissioning of the company's new cement plants at Gujarat and Andhra Pradesh.

The cement division continued to be a drain on the company's bottomline, although company officials claim the unit recorded a cash profit. There was a substantial downward in pressure due to a glut in several markets as export demand dropped substantially, and the company said it has taken several cost-cutting measures at the division. The unit continued to be the country's largest exporter of cement and clinker with a share of over 40 per cent. Total production at 9.6 million tonnes shows an increase of 43 per cent over the previous fiscal.

Larsen & Toubro, which is now the largest cement producer today with a capacity of 12 milliontonnes, is planning to give a major thrust to its overseas plans. The company is setting up a bulk terminal for cement as well as a packaging unit in Sri Lanka to cater to the island nation. For the project, the company has teamed up with Sri Lankan firm Ceylinco, who will hold 20 per cent of the equity. L&T will have a 80 per cent holding in the venture.

Diversified order book to help

L&T's cement division has made a cash profit in the last fiscal. Contribution from the division was 22 per cent, though realisation was low for the year. However, the division contributed around 10 per cent of the operating profit, that is, around Rs 76 crore. Further, the company has maintained the same rate of depreciation, which for the cement units would work out to around Rs 60-70 crore. Taken together, this takes care of the bulk of interest payments of the company, resulting in a small cash profit from the unit.

As for the EPC division, the company already has a backlog of Rs 5,800 crore as on March 31,1999, new orders are of Rs 7,290 crore and the company is hoping to increase this to Rs 10,000 crore. More importantly, unlike the previous year, where a substantial chunk of the order book was from the DHDS projects, this time these project account for less than 10 per cent of the new order book. With a diversified order book, a bulk of which is from municipalities and state governments, the company is likely to do very well on this front, even if cement division does not contribute to the bottomline.