L&T TO BE SPLIT INTO NINE INDEPENDENT ENTITIES; STOCK RISES
MUMBAI: Larsen & Toubro rose more than 1 per cent after the Economic Times reported the engineering and construction conglomerate would be split into nine independent companies.
Twenty-one months before he retires, L&T Chairman AM Naik has kicked off a restructuring plan that will divide the37,000-crore engineering and infrastructure behemoth into nine virtual companies.
Each of these, being called `independent companies’, will have a full-fledged CEO, CFO and HR head, and will manage its own profit and loss account, Naik said. Each will even have its own board of directors with at least three independent directors.
Some of these independent companies could be spun out of L&T and listed on the bourses before 2015, Naik said.
“By March 2012, each of these independent companies should by 75% ready to get listed, should we want to list them,” Naik said. “We will decide which ones get listed as we go along. I can’t tell you now how many will be spun off by 2015.”
The nine boards that will soon be set up at the independent companies will not have any legal or statutory standing, but will merely advise the CEO and management of these entities. Ten of the 27 independent directors needed at these nine companies have already been identified. Naik declined to disclose any names.
“The independent companies will act as if they are listed entities, short of facing the shareholders,” he said.
Source: ET
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