The Hindu : L&T appoints Naik as CMD, to exit glass container business

Online edition of India's National Newspaper
Wednesday, Dec 31, 2003

Business

Business

L&T appoints Naik as CMD, to exit glass container business

By Our Staff Correspondent

A. M. Naik coming out of the L&T board meeting in Mumbai on Tuesday after he was appointed Chairman and Managing Director of the company. Other board members including Kumarmangalam Birla and Rajshree Birla are also seen. — Photo: Shashi Ashiwal

MUMBAI DEC. 30. The board of Larsen & Toubro (L&T) has appointed A. M. Naik as the Chairman and Managing Director (CMD) of the company. Mr. Naik has successfully led the company through some of its most challenging times since he took over as Managing Director and Chief Executive Officer (CEO) in April 1999.

Mr. Naik is L&T's first whole-time executive chairman for over a decade and a half. He is also the first to have risen from executive ranks of the company to be appointed Chairman. In fact, L&T has not had an executive Chairman since N. M. Desai retired in March 1989. Mr. Naik will be CMD of the company for five years from April 28, 2004.

Addressing a press conference here today after the board meeting, Mr. Naik announced L&T's decision to divest its glass container business on a going concern basis subject to shareholders' approval.

As part of the review of its business portfolio, L&T had decided to exit its glass container business and accordingly has been exploring various options. According to Mr. Naik, "As per the report prepared by the Boston Consulting Group (BCG) in 1999, we had decided to exit non-core areas. The glass business had no takers until now. We will focus on the core areas of construction, project engineering, E&C, electrical, electronics, information technology and information technology engineering services". However, Mr. Naik was quick to add that the company's joint venture with John Deere (a Fiat group company) for making tractors would remain, "as it is part of the part of our capital goods business".

Over the last few months, the company has been in discussions with interested parties and now expects to conclude the final agreement on completion of due diligence by the potential buyer. The transaction, which, according to Mr. Naik would be under Rs. 100 crores for the glass business, is likely to be consummated by the end of this fiscal year.

"There are two interested parties and both of them are carrying out the due diligence. This should be completed by the third week of January," said Mr. Naik. Speaking on the sidelines of the meeting, Mr. Naik said the company's new strategic business unit (SBU) for hydel power was doing well. "We started off well with a good order backlog. The prospects for hydro power are great and it can be a Rs. 500 crore per annum business for us in the next 2-3 years with government's help".

Mr. Naik also said that the Bangalore International Airport project set up as Bangalore International Airport Company (BIAC), had received Union Cabinet approval and would achieve financial closure by January or February 2004 and work would start immediately.

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