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L&T exits packaging, glass businesses

Rumi Dutta

Engineering and construction major Larsen & Toubro, in a major move towards streamlining its businesses, has decided to exit its packaging and glass businesses.

The two businesses contribute around Rs 2 billion to its total turnover of Rs 78 billion. Confirming the development, senior executives at L& T said, "Though we are looking at selling our packaging and glass businesses, we are not looking at a distress sale. We are expecting good valuation for these units."

Though L&T is a significant player in both packaging and glass, analysts said they were both low margin business and do not contribute much to its overall bottomline.

The diversified conglomerate is also in the process identifying other non-performing businesses which may soon be out of the company's portfolio.

"We are identifying the areas where small investments can lead to substantial increase in the revenue contribution to the company. We are looking at manufacturing new products in our existing facilities," sources said.

As an example, the company has begun to focus on its defense equipment manufacturing and plans to diversify into some other areas like aircraft-parts manufacturing, nuclear valves, ferro-manganese castings, among others.

The revamp of its portfolio began earlier this calendar year when the company decided to get a buyer for its 100 per cent subsidiary, Tractor Engineers, which manufactures undercarriages, bulldozers and mobile crushers. It has also shelved its plans to foray into communications business, which included getting into the ISP business and telecom infrastructure.

L&T's packaging unit markets a variety of bottle closures manufactured at its plant in Powai, Mumbai.

The company's product range includes `Intact' crown caps for soft drinks and beer, 'ProTec' roll-on-pilfer-proof caps for liquor and pharmaceutical products, 'VacuSeal' caps for processed food and `fresh Top' beverage caps for carbonated drinks.

The company markets high quality glass containers manufactured at its glass works at Nashik, Maharashtra, set up in technical collaboration with Vetropack, Switzerland. The containers are used for soft drinks, cosmetics, processed foods, pharmaceuticals, liquor etc.

The engineering and construction, cement and electricals business contributes 59 per cent, 28 per cent and 9 per cent respectively to the total turnover of the company. The other businesses account for around 4 per cent of the company's total turnover.

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