L&T in talks to sell unit for $3-billion

Larsen & Toubro is in talks with several engineering firms to sell its electrical and electronics unit in a deal that could be worth up to $3 billion, two sources with knowledge of the matter said on Friday. Larsen, India's top engineering and construction firm, is in talks with France's Schneider Electric and US diversified industrial firm Eaton, among others. A deal could be sealed in the next few weeks, they added, declining to be named because the details were not public yet.

A Larsen spokesman declined to comment on the matter. The electrical and electronics division manufactures switchgears, circuit breakers and switchboards and accounts for 7% of Larsen's revenue.

The business is expected to report revenue of R3,500 crore ($786 million) for the fiscal year ended March, but has been facing rising cost and competitive pressures in recent quarters.

Larsen is looking to value the business at three to four times annual revenue, one of the sources said. However, sector analysts put a likely valuation at 2.5 to 3 times revenue .

Earlier this year, Larsen said it would reorganise its operations into nine businesses to simplify its structure and better manage growth. The country plans to spend $1.5 trillion in the 10 years to 2017 to revamp its infrastructure and has also outlined plans to add generation capacity of 100,000 mw from 2012 to 2017, attracting global manufacturers optimistic on growth in Asia's third-largest economy.

Please read our terms of use before posting comments
TERMS OF USE: The views expressed in comments published on indianexpress.com are those of the comment writer's alone. They do not represent the views or opinions of The Indian Express Group or its staff. Comments are automatically posted live; however, indianexpress.com reserves the right to take it down at any time. We also reserve the right not to publish comments that are abusive, obscene, inflammatory, derogatory or defamatory.