By BS Reporter
Engineering and construction giant Larsen and Toubro Ltd (L&T) has decided to sell its entire stake in L&T Plastic Machinery Ltd to Japan's Toshiba Machine Co Ltd for an undisclosed sum, in line with the company's strategy to realign portfolios and focus on core business units.
The plastic machinery business reported sales of Rs 206 crore and a net profit of Rs 11 crore last year, a tiny fraction of the total consolidated sales (Rs 64,313 crore) and profit (Rs 4,682 crore) of the company. L&T Plastic Machinery manufactures and markets injection moulding machines used in various sectors.
L&T Chief Executive K Venkataramanan has said the firm expects strong growth in its hydrocarbon business portfolio and hopes to meet its order inflow and margin guidance targets in FY13.
While the company reported growth in sales and profit in FY12, fresh orders declined 12 per cent on an overall basis. The hydrocarbon segment, however, saw growth and international orders compensated for a slowdown in the domestic market.
"We see a fairly healthy order pipeline in the hydrocarbon business from ONGC and overseas. We hope to report sales of Rs 10,000 crore this year,'' Venkataramanan said on Monday.
The company also expects orders from new fertiliser plants after the government finalises urea investment policy. Venkataramanan has vast experience in the hydrocarbon sector and headed the division before his elevation to the CEO's post earlier this year.
The company on Monday announced about Rs 2,000 crore of engineering, procurement and construction orders from Petroleum Development Oman and ONGC. This is the second order from Omani company and L&T hopes to bag similar orders from other Gulf states. The hydrocarbon portfolio accounts for 12 per cent of the company's revenue and, last year, it grew 18-19 per cent. "Margins have been good and we will maintain them,'' he said, adding some of the orders being secured and negotiated now have rolled over from first quarter.
L&T has given 15-20 percent order guidance for 2012-13. It saw order inflows of Rs 70,574 crore in 2011-12 and has guided for order inflows of Rs 82,000-84,000 crore in the current financial year.
Sector analysts, however, have expressed scepticism over L&T meeting its order inflow targets and said the targets were challenging.