While a final decision in this regard is expected to be taken only by the second quarter of the calendar year 2001, a top executive ruled out the possibility of a joint venture.

Company sources told The Financial Express: "We may, however, have some satellite joint ventures for LTITL." The new entity is also planning to tap the market with an initial public offering (IPO) to raise funds for expansion.

Sources said that detailed discussions on the LTITL future plans would take place shortly. The decision to hive off LTITL from L&T has been on the anvil for quite some time now.

This is in accordance with the recommendations of the Boston Consulting Group of USA (BCG). L&T had launched Project Blue Chip with facilitation from the BCG last year with a view to enhance focus on business portfolios.

LTITL's new chief executive Vijay Kumar Magapu will preside over the transition. He has recently taken over the reins from Mr Achyut S Godbole, who is joining as head of India operations of a California-based e-commerce venture.

According to Mr Sachin Mathur, an analyst at CRIS INFAC, "There are two potential benefits from such an exercise. Firstly, in terms of valuation and with launching an ADR issue, as otherwise the value gets logged in the parent company. The second benefit is in terms of a different company structure and pay scale."

LTITL, as of now, contributes a small proportion of L&T's business. The company achieved sales of Rs 165 crore last year. The engineering and construction group (E&C), cement and electrical business group (EBG) together account for 93 per cent of L&T's sales. L&T is also trying to facilitate a process whereby people from the operating division who are looking for a software career can shift to LTITL. It had been recently reported that there had been a large exodus from LTITL due to the inflexibility in transition from the parent group.