L&T plans to list both IT arms in 2016
31 May 2014
Engineering and construction major Larsen & Toubro (L&T) on Friday announced plans to take both its technology subsidiaries - L&T Technology Services and L&T Infotech – public, in a bid to emerge as the largest technology services provider in the country.
L&T would start the process of listing the two firms from July 2016, group executive chairman AM Naik said while announcing the company's results.
"We are the number one firm in the engineering space. Though we are too young in the infotech business and smaller than competitors, we want to be one of the strongest brands in the country and outside," he said.
L&T reported a 25 per cent increase in net (after tax) profit for the year at Rs5,493 crore against Rs4,384 crore in the previous year. The recurring net profit for the year at Rs4,905 crore also grew 18 per cent on a year-on-year basis.
Net profit for the January-March 2014 quarter at Rs2,723 crore recorded an impressive increase of 69 per cent.
L&T reported a 6 per cent decline in its consolidated net profit for the year ended 31 March 2014 at Rs4,902 crore. The company attributed this to a decline in the operating margins of the hydrocarbon business and the initial losses incurred by new ventures such as
L&T Shipbuilding Limited and L&T Special Steel and Heavy Forgings Private Limited, as these subsidiary companies are yet to gain scale.
The company reported a growth of 14.26 per cent in consolidated net revenue for FY14 at Rs85,128.4 crore, from Rs74,498 crore last fiscal (2012-13). Of this, L&T Technology Services and Infotech together contributed Rs110 crore.
The board of directors of the company has recommended a dividend of Rs14.25 per equity share.
"Considering our growth plans and the reach of our brand, we expect 18-20 per cent rise in the incomes of the two companies in the next two years. Therefore, by the time we list these two firms, their total revenues would have reached around Rs150-160 crore, if we grow organically and don't acquire any other company. I think both are doing well and will do well in future as well," he said.
L&T Infotech provides IT services and solutions in various verticals, including banking, insurance, energy and utilities, auto and aerospace.
L&T Technology Services provides end-to-end services, including product design, analysis, prototyping and testing, embedded system design, manufacturing engineering, plant and construction engineering, asset information management and engineering process support.
L&T expects performance of core sectors such as infrastructure, power, minerals and metals, defence, oil & gas, which hold business prospects for the company, to improve with fresh impetus through focused policy decisions and rigorous implementation by the new government.
On the international front, L&T said the Middle East region offered promising prospects in infrastructure and oil and gas sectors.
L&T said it is well positioned to tap the emerging opportunities in its core businesses and looks forward to a period of renewed investment momentum and sustainable growth. Given its large order book, the company is optimistic to maintain its growth momentum, it added.