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…and of a popular trade leader Readers' Mail Adharma of opposition politics The rise and rise of KCP The Gulf aviation boom Building loyalty through the stomach Marketing expert Balagopal is no more ONGC at KG Basin London, London Narayan Roaring Ro-Ro facility He saved millions from starvation... Why this malaise in medical education? TN-leverage strength of BHEL, NLC... Odisha: spectacular win by Naveen Patnaik A rich pool of talent not utilised…. Permanent secretariat for TN GIM Where is Rajaji? Return to king coal for urea... All eyes on Sankara Nethralaya Boy, can you beat these? The nuclear option to the lack of interest on the part of these to focus on original research. This despite the much lower costs of such research in India. The industry which thrived on the protection of a closed economy and the advantage of a vast domestic market, has failed to organise its evolution on healthy lines Welcome GST When small is no larger beautiful.. Liberal imports idling indigenous capacities Plummeting profits of PSBs The sea- saw battle continues... CRS, a jewel among managers, is no more. Tribute – UCAL Selvan… Delhi returns to BJP Where a state respects its litterateurs… Welcome focus on core competence Of course, Gujarat is vibrant Tough task taking states together The balancing act Editor's Notes Moily’s bold thrust F C Kohli - his concerns all embracing Welcome changes that testify to Jayalalithaa’s return to health EVM is tamper-proof Remembering Indira Sivasailam... The ‘Ayyo-yes’ is no more A welcome initiative by the judiciary Towards speedy justice Fortune for Indian Airlines Dr C Rangarajan returns to Chennai Auto components surge… Sweeter prospects for sugar CIPET hqrs to stay at Guindy – for the present? L&T: focus on infrastructure and more infrastructure… Kudos to NDTV... A glass full of corruption Nuclear power at the nucleus Not just in-laws (and outlaws); they’ve renowned academics at the helm! 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Gay abandon in pricing Land reclamation from sea appears cheaper! Airlines in India: cost and space Engineering seats go abegging S Ramanathan – a versatile musician, musicologist A professional at the helm of IRDA... This scant respect for Law Gas is the way forward Make standards certification mandatory... Solar, solar everywhere … Sri Lanka votes for change Insurance companies bleeding, yet no decision on increasing FDI limit! The brown list of Venkitaramanan Fuel for thought Road development slows down Convulsions in The Hindu Focus on quality of power - its only around 170-180V Shaming of Tamils by Tamil farmers at Delhi TELANGANA at last…BUT Mersal magnified An inexplicable neglect Don’t seem to feel the pulse… Excel Generators provide the vital back-up Strengthen the base... IAS invades NDDB... New IT products of Ramco in the pipeline… Streamlining mandatory third party cover Tribute TGS- The king storyteller Shipping woes of Chennai companies
 
L&T- the specialty of special purpose vehicles

A decade ago, engineering and construction giant Larsen & Toubro conceived a bold, new plan: to form separate subsidiaries or special purpose vehicles to focus on new projects. This enabled the company to access and acquire expertise in new areas such as toll roads and bridges, airports, seaports, metro and rail systems.  I remember the foresight and passion with which A Ramakrishna (AR) explained this foray.

Of course, such a pioneering effort, involved certain business risks. AR took efforts to explain the benefits of the toll road concept, which found resistance in the initial period. In quick time, the concept gained acceptance and opened the floodgates for massive expansion of quality road network. With handsome funding by the private sector, road construction recorded growth as never before.

Equally innovative was the lead taken by L&T ECC to form a separate company for the construction of the Bengaluru airport. Its reputation and record were helpful in ensuring participation by reputed global companies. This experience was a big stepping-stone for taking up construction of the much larger airports at Delhi and Mumbai.

Such enterprise extended to form more such companies. The large Dhamra Port in Odisha in partnership with the Tatas is another major venture. K V Rangaswamy who headed the construction division pointed to L&T gaining rich expertise in such diverse fields for engineering and construction, build value and sell its share in such projects to good profit. The company thus derives twin advantages: getting  orders for constructing such large projects and on completion, to sell these at profit.

The L&T Shipbuilding Ltd on which L&T has invested around Rs 4000 crore is another example of a handsome diversification. This project has three components: an engineering unit, shipbuilding cum repair facility and a container port. The present recessionary conditions come in the way of full utilisation of the niche facilities created. With the expected turn around of the economy, the operations would become profitable.

 The construction division had been accounting for around half the revenues of the giant corporation. With the slowdown in the economy affecting the manufacturing sector in the current year, the construction division may account for larger share, of around 75 per cent, of the revenues of the corporation.

Author : S Viswanathan
Reported On : Mar 03,2014
Sector : Industry
Shoulder : Editor's Notes
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