L&T to demerge cement business

L&T to demerge cement business
ENS ECONOMIC BUREAU

MUMBAI, JULY 4: Larsen & Toubro has decided to demerge its cement business as per the recommendations of the Boston Consulting Group. L&T has invited proposals from five merchant bankers who will work on the financial restructuring of the demerged cement business and also help the company scout for appropriate strategic/financial partners.

The list of merchant bankers comprises JP Morgan, DSP Merrill Lynch, Jardine Fleming, Dresdner and Morgan Stanley. L&T would continue to focus on its key areas of EPC (engineering, procurement and construction), electricals, communications and agro-machinery. EPC contributes to 55-60 per cent of turnover while cement accounts for around 25 per cent.

The company would evaluate all options in the demerger process which would last eight months. A host of big names in the global cement business are reportedly keen on becoming partners in the cement business though they are not likely to be offered a majority stake. The demerger is in line with the company's commitment to enhancing shareholder value.

L&T's overall cement capacity is 14 million tonnes with its plants located in Maharashtra, Gujarat, Madhya Pradesh and Andhra Pradesh. The company recently bought out Narmada Cement in Gujarat which has an installed capacity of 1.2 million tonnes.