L&T keen on larger play in firm

Written by MG Arun | Rachana Khanzode | Mumbai | Updated: Jan 10 2009, 06:28am hrs
Indias largest engineering and construction company, Larsen & Toubro (L&T), said it was willing to consider an alliance with Satyam upon settlement of lawsuits if there was intrinsic value in the company, according to a statement made to a television channel on Friday by AM Naik, chairman of the Rs 35,000-crore company.

L&T has a 3.95% stake in Satyam through investment arm L&T Capital. Informed sources said Naik could be inducted on the IT majors board given that its stake makes L&T one of its largest shareholders. L&T may not be averse to hiking its stake later, a source added. Stock markets did not take too kindly to Naiks indication. Shares of L&T fell 7.15% on the BSE on Friday to close at Rs 720.10.

With its infrastructure business coming under pressure, L&T, which already has an IT armL&T Infotechwould be looking at new avenues of growth. Naik told FE in September that the slowdown in infrastructure projects, financing issues related to PPP projects, and delays in refineries would set back L&Ts order books by Rs 10,000 crore.

L&T is believed to have purchased the Satyam shares on January 1, which means it spent close to Rs 455 crore for around 2.5 crore shares at Rs 182.35 per share. However, the scrip has fallen sharply since then, closing at Rs 23.85 on the BSE on Friday, a fall of 40.3%.

Aberdeen Asset Managers, which held 3.53% in Satyam at September end, has sold its entire stock. Fidelity Management & Research Co, which held 3.42%, has also dumped its Satyams shares, as have Swiss Finance Corp (Mauritius) Ltd and Morgan Stanley Mauritius Ltd. Other key shareholders include ICICI Prudential Life (2.47%), Lazard Asset Management (2.15%) and LIC (1.48%).

Naik on Friday reiterated that his company would not buy any more Satyam shares unless there is more clarity. He said L&T had bought a 4% stake to strike a strategic alliance in the future. The unlisted L&T Infotech has clients in banking & financial services, insurance, energy & petrochemicals and automotive.