NEW DELHI: Leading private infrastructure firm Larsen and Toubro today said it has sought shareholders' approval to transfer its electrical and automation business to a subsidiary.
"The Board of Directors of the company at its meeting held on April 6, 2011, has approved seeking of shareholders approval for transfer of the Electrical & Automation (E&A) Business to a subsidiary and / or associate company or to any other entity," the company said in a regulatory filing.
The filing added that the restructuring will be done as per the relevant sections and rules of the Companies Act, 1956.
The company in a separate notice to shareholders today said that the proposed restructuring would not include the medical equipment business.
In January, Larsen and Toubro group had announced that it would restructure its operations into nine independent entities, including the electrical and automation business.
According to media reports, the company is planning to sell this division and is in talks with Schneider Electric and Eaton Corporation. The reports also suggested that L&T is looking at valuation of Rs 12,000-14,000 crore for the electrical and automation business.
This could not be verified independently with Larsen. Bank of America Merrill Lynch recently valued Larsen's Electrical and Automation business at about Rs 8,900 crore.
Industry experts said that L&T is trying to sell its non-core businesses and wants to focus more on engineering and construction segment which accounted for more than 85 per cent of sales in 2009-10 at Rs 31,650 crore.
On the other hand, Electrical and Automation's (formerly Electrical and Electronics) gross sales were reported at Rs 3675 crore with profit before interest and tax (PBIT).
The proposed to be demerged business of the L&T, which employs approximately 5328 persons, has manufacturing facilities at Mumbai, Ahmednagar and at several locations abroad, while its portfolio covers a big range of electrical equipments, including low and medium-voltage switch-gears.
Following the announcement of the news, scrips of the company were up by 1.62 per cent today on the Bombay Stock Exchange, at Rs 1,706.80 apiece.
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