Larsen & Toubro (L&T) the country’s largest listed engineering firm may exit its 50 per cent shareholding in an equal joint venture with Tata Steel as it looks to encash value from matured projects and reinvest in greenfield ventures in the port sector.
“We plan to sell stake in some of the matured projects of L&T Infrastructure Development Projects (L&T IDPL). This will help provide some benchmark for valuing the attractive set of over two dozen projects that the company has across different domains such as roads and ports. In the case of our stake in 27 million tonnes per annum in Dhamra Port Company we feel that we could encash value from here and use the proceeds to invest in other port projects where we can create similar value,” a top L&T official familiar with the restructuring plans told Financial Chronicle.
L&T IDPL a 97.65 per cent subsidiary of L&T, develops, operates and maintains infrastructure projects and also provides advisory services relating to financing and engineering of the projects. Prominent projects being undertaken by the subsidiary include the Hyderabad Metro, seven operational road/bridge projects, five other road-/bridge projects, International Seaport at Haldia and 11 other urban infrastructure projects as per L&T’s last available annual report. L&T also has a stake in a container port at Kattupalli in Tamil Nadu.
L&T IDPL posted total income of Rs 59 crore and a profit after tax of Rs 16 crore for the financial year ended March 2011.
When contacted by FC, L&T spokesperson D Morada declined to comment. Koushik Chatterjee, group chief financial officer at Tata Steel, said, “We do not comment on matters involving two partners.”
Dhamra Port Company has been awarded a 34-year concession by the Orissa government to build, own, operate, share and transfer a deep water all weather port at Dhamra that can accommodate super cape size vessels of up to 1.8 lakh dead weight tonnes.
The port that commenced commercial operations on May 6, 2011, aims to service the mineral hinterland of north Orissa, Jharkand, West Bengal and Chhattisgarh to facilitate transport of minerals such as iron ore within and outside India. The port also has a 62.5 km rail link to the main Howrah-Chennai lines at Bhadrak.
In phase-I of the Dhamra port, two fully mechanised berths; one for handling import cargo and the other for export cargo with back-up facilities have been built, along with a rail corridor for hinterland connectivity. The port has two fully mechanised berths of 350 metres each along with backup facilities for handling imports of coking coal, steam/thermal coal, limestone and export of iron ore.
In its 2010-2011 annual report, L&T said that L&T IDPL and Tata Steel have given a joint undertaking to lenders not to reduce their joint shareholding in the venture to below 26 per cent during the operations period of the venture. IDBI is the lead bank for the lending consortium. Both partners have even pledged a part of their share holding in the venture to financial institutions as additional security for the debt facilities. As of March 31, 2011, L&T and Tata Steel each had invested Rs 324 crore in the JV as fully paid-up equity shares.
Dhamra port is strategic for Tata Steel as a gateway to enable efficient transfer of raw materials and finished products from it’s under construction six-million tonne per annum greenfield integrated steel plant at Kalinganagar, Orissa. The plant will make hot and cold rolled flat steel products including premium grades of steel. The first phase of the project is expected to be commissioned by January 2014.
Dhamra Port will be of strategic importance to Tata Steel in terms of its integrated logistics cost of raw materials and will also consolidate Tata Steel’s supply chain network, contributing to its expansion aspirations, the Tata flagship said in its 2010-2011 annual report.
“We plan to sell stake in some of the matured projects of L&T Infrastructure Development Projects (L&T IDPL). This will help provide some benchmark for valuing the attractive set of over two dozen projects that the company has across different domains such as roads and ports. In the case of our stake in 27 million tonnes per annum in Dhamra Port Company we feel that we could encash value from here and use the proceeds to invest in other port projects where we can create similar value,” a top L&T official familiar with the restructuring plans told Financial Chronicle.
L&T IDPL a 97.65 per cent subsidiary of L&T, develops, operates and maintains infrastructure projects and also provides advisory services relating to financing and engineering of the projects. Prominent projects being undertaken by the subsidiary include the Hyderabad Metro, seven operational road/bridge projects, five other road-/bridge projects, International Seaport at Haldia and 11 other urban infrastructure projects as per L&T’s last available annual report. L&T also has a stake in a container port at Kattupalli in Tamil Nadu.
L&T IDPL posted total income of Rs 59 crore and a profit after tax of Rs 16 crore for the financial year ended March 2011.
When contacted by FC, L&T spokesperson D Morada declined to comment. Koushik Chatterjee, group chief financial officer at Tata Steel, said, “We do not comment on matters involving two partners.”
Dhamra Port Company has been awarded a 34-year concession by the Orissa government to build, own, operate, share and transfer a deep water all weather port at Dhamra that can accommodate super cape size vessels of up to 1.8 lakh dead weight tonnes.
The port that commenced commercial operations on May 6, 2011, aims to service the mineral hinterland of north Orissa, Jharkand, West Bengal and Chhattisgarh to facilitate transport of minerals such as iron ore within and outside India. The port also has a 62.5 km rail link to the main Howrah-Chennai lines at Bhadrak.
In phase-I of the Dhamra port, two fully mechanised berths; one for handling import cargo and the other for export cargo with back-up facilities have been built, along with a rail corridor for hinterland connectivity. The port has two fully mechanised berths of 350 metres each along with backup facilities for handling imports of coking coal, steam/thermal coal, limestone and export of iron ore.
In its 2010-2011 annual report, L&T said that L&T IDPL and Tata Steel have given a joint undertaking to lenders not to reduce their joint shareholding in the venture to below 26 per cent during the operations period of the venture. IDBI is the lead bank for the lending consortium. Both partners have even pledged a part of their share holding in the venture to financial institutions as additional security for the debt facilities. As of March 31, 2011, L&T and Tata Steel each had invested Rs 324 crore in the JV as fully paid-up equity shares.
Dhamra port is strategic for Tata Steel as a gateway to enable efficient transfer of raw materials and finished products from it’s under construction six-million tonne per annum greenfield integrated steel plant at Kalinganagar, Orissa. The plant will make hot and cold rolled flat steel products including premium grades of steel. The first phase of the project is expected to be commissioned by January 2014.
Dhamra Port will be of strategic importance to Tata Steel in terms of its integrated logistics cost of raw materials and will also consolidate Tata Steel’s supply chain network, contributing to its expansion aspirations, the Tata flagship said in its 2010-2011 annual report.