L&T expects high revenue in power, rail biz unit

Mumbai: Larsen and Toubro anticipates revenues in excess of Rs 4,300 crore annually from the power segment by 2011-12 and over Rs 2,000 crore business a year in two years from its railway business division, Mr A.M. Naik, Chairman, said on the sidelines of the annual general meeting.

The company has doubled the capacity of its automation system centre and the country’s largest integrated factory for track systems and module was operational at Talegaon.

It has also acquired another 400 acres at Hazira for setting up manufacturing facilities for super critical boilers and steam turbines and generators, besides establishing a railway business unit to become a turnkey solutions provider for the railways.

This would more than offset any slowdown that might come about, he said while adding that the property division and refineries businesses were expected to be lower.

Emphasising that the company would continue to grow at over 30 per cent, he said the order book of Rs 58,000 crore would touch Rs 70,000 crore by March 2009. Over 70 per cent of the orders were insulated against price variation, he said adding that from now on the company would look to cover price variation in all contracts.

On exit from non-core businesses such as the medical equipment division, he said the process was on and should culminate in a couple of months, while indicating that he was not getting the right valuation for it.

Asked whether the Special Undertaking of UTI was likely to offload its stake in L&T, he said he was in reasonable comfort that it would not be done with the Government keen on its interest in L&T.

Replying to shareholders on organisation restructuring, he said the old model held good for a $10-billion company.

“We have plans to create 12 operating companies within the L&T corporate structure and each operating company will be responsible for its strategic and operational decisions and performance. Each company would have independent support functions such as finance and accounts, HR and supply chain management. The new structure was expected to provide a platform for sustained value creation.”

The record date for the 1:1 bonus issue announced by the company would be October 3, Mr. Naik told the meeting.