Larsen & Toubro Ltd.

Three months after dividing its complex web of 64 businesses into nine independent entities, Larsen & Tourbo (L&T) is shifting focus to joint ventures (JVs). The Rs 45,000-crore engineering & construction company is reviewing the future of some of its manufacturing JVs. It was likely to selectively exit JVs where it was not a majority shareholder. The immediate focus is on two JVs under the machinery and industrial products division.

L&T has in the past realigned many of its JVs. In 2009, after 10 years of operations, it parted ways with Germany’s Demag Plastics Group. The 50:50 joint venture for making plastics machinery ended after Demag’s new parent, Sumitomo, decided to go it alone in the Indian market. In the same year, German engineering company Voith bought L&T’s stake in Kolkata-based Voith Paper Technology. More recently, L&T bought out Messer Electric and Castolin Group of Germany from its equal JV, L&T EWAC Alloys, a market leader in welding solutions. L&T also exited the Bangalore airport project, in which it held a 17.5 per cent stake.

L&T would insist on majority control in strategic JVs, a trend that is clearly visible in ties with Mitsubishi Heavy Industries for boilers and turbines, JVs with Kobe Steel and the defence JV with EADS. The small, non-core businesses that do not earn Rs 500 crore by March 2013 will be put on the block. These are likely to include medical equipment and tangel businesses.
 
crackcrack