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L&T to raise $700 million through GDRs

Larsen & Toubro (L&T) received shareholder nod on Friday for raising $700 million through the issue of global depository receipts (GDRs).

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Planning big ship-building project

MUMBAI: Larsen & Toubro (L&T) received shareholder nod on Friday for raising  $700 million through the issue of global depository receipts (GDRs).

At the company’s 62nd annual general meeting on Friday, chairman and managing director A M Naik said: “The company has lined up massive investments in different sectors in the next three to four years. We will issue GDRs to raise capital.”

L&T’s fund-raising strategy will mirror its 1996 plan, when the company issued GDRs for the first time.

The proposed second GDR offering will also see the company seeking a listing on the Luxembourg Stock Exchange, Naik said.

He said the funds would be pumped in to expand its presence in different businesses such as ship-building, financial services and other public-private partnership projects that the company will take up.

L&T has short-listed two sites in Chennai and Gujarat for its ambitious ship-building yard project. The location would be finalised by September-end.

“There is not a single shipyard of the kind that we are thinking of. Our yard would be into the higher end of ship-building than mere ordinary carriers,” Naik said.

He said it would be spread over 500 acres and would attract an investment in the range of Rs 1,500 crore-Rs 2,000 crore. At the outset, the company would not go for any tie-ups, but once major orders pour in, it would definitely have to go for alliances, Naik said. L&T was also mulling a separate ship-building subsidiary by the end of December 2007.

The company is also planning a capital expenditure of Rs 2,000 crore for its existing businesses.

L&T will also foray into special economic zones, specialising in heavy industry and for its IT operations.

Apart from its overseas GDR offering, L&T is preparing to list a few subsidiaries. The company’s IT subsidiary - L&T Infotech — would launch an IPO by the end of late next year. Two other subsidiaries - L&T Finance and L&T Infrastructure Holding —would hit the capital market in the next three years.

L&T already has a substantial defence-related infrastructure in the country. Once it gets the Raksha Udyog Ratna (RUR) status, it would look forward to increased business in the defence sector.

“We already have facilities at Hazira, Coimbatore and Talegaon. After the RUR status, we would look at capacity expansion and get into project- specific designing,” said Naik.

L&T, he said, was only a promoter in the project and had a share of Rs 500 crore in Indian currency. Engineering and construction being its core business, the company was looking forward to a major chunk of job at the Mumbai airport.

“Currently, we have works close to Rs 150 crore in the airport but are looking at something in the lines of Delhi, where orders are in the tune of Rs 5,400 crore,” Naik said.

 

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