L&T, which plans to set up holding companies for power and infrastructure sector, is in talks with institutions for joint ventures. IL&FS has shown interest both in power and infrastructure companies, said L&T senior vice-president YM Deosthalee. Talks with AIG and SDCL were so far limited to the infrastructure company. However, L&T may discuss with them for power company too. Initial equity base of these companies will be small but will be enhanced as the companies take on the new projects.

Proposal for the two holding companies is part of the L&Ts overall restructuring programme. As per the plans some of the present investment in various power and infrastructure projects will be shifted to these new entities. Even for the new investment in these sector the holding companies willhave the first of refusal, said Deosthalee.

If L&T wants to take equity in any of the related projects these companies will be consulted first, however, if they refuse to participate L&T is free to go ahead with the plans on its own strength.

Earlier addressing the seminar here on infrastructure project financing, Deosthalee said that infrastructure development which is the key of the overall growth has been very slow in the country.

A long-term funding mechanism is urgently needed for financing the infrastructure projects which have a long gestation period and even longer pay back period. He suggested that the government should allow investment of insurance, provident and pension funds in the infrastructure projects.

Besides, a vibrant capital market is also important to generate resources for such projects. He said the higher interest rates is another problem in raising the huge funds. Besides the problem of financing the infrastructure sector also suffers from the lack of clear policy andbureaucratic delays.Power and infrastructure are among key business areas of L&T. On Thursday while addressing the shareholders at the annual general meeting of the company, managing director and chief operating officer AM Naik, said that power, infrastructure sector and information technology, will remain the engines of growth for the company.