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Larsen & Toubro to Split in Nine Units ‘Over Time’

Jan. 5 (Bloomberg) -- -- Larsen & Toubro Ltd., India’s biggest engineering company, will split into nine units “over time” as part of a reorganization to improve growth prospects of the businesses.

“It’s not something that will happen with a big bang, it’s something that will happen over time,” spokesman Deepak Morada said today by telephone from Mumbai, where the company is based. “The decision was taken to get increased focus on specific businesses and this will enable independent growth.”

Larsen will list some of the units that split by 2015 to help streamline the 64 business that the company operates, the Economic Times reported today, citing Chairman A.M. Naik. The company’s board has approved the changes, the report cited Naik as saying. Two calls made to the mobile phone of Chief Financial Officer Yeshwant M. Deosthalee were not answered.

“The split will be positive for the company as it will enable the units to focus on specific businesses,” said Chirag Muchhala, an analyst at Jaypee Capital Services Ltd. in Mumbai. He has a 12-month price target of 2,020 rupees on Larsen.

Muchhala has a 12-month price target of 2,020 rupees for Larsen shares with a “neutral” recommendation.

Larsen, which gained 18 percent last year, fell as much as 1.7 percent to 1,942.55 rupees and traded at 1,945 rupees as of 12:23 p.m. in Mumbai. The benchmark Sensitive Index of the Bombay Stock Exchange fell 0.6 percent.

The company’s areas of business are power, hydrocarbon, machinery, switchgear, heavy engineering, infrastructure, building and factories, metals and minerals and electrical products, the newspaper said.

To contact the reporters on this story: Andrew Macaskill in New Delhi at amacaskill@bloomberg.net; Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.

To contact the editor responsible for this story: Margo Towie at mtowie@bloomberg.net

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