L&T Secures $112 Million Power Distribution Order from JSW Energy, Restructures ECC Division

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Researched by Industrial Info Resources (Sugar Land, Texas)--Engineering and construction major, Larsen & Toubro Limited (BOM:500510) (L&T) (Mumbai) recently secured a $112 million order to set up power distribution lines from the 1,200-megawatt power plant being constructed by JSW Energy Limited (Mumbai) at Ratnagiri in the western state of Maharashtra. L&T's Engineering Construction and Contracts (ECC) division will set up 400-kilovolt transmission lines over a length of 169 kilometers, connecting Jaigad to Karad and New Koyna. L&T will be responsible for the site survey, supply of components including conductors, hardware accessories, insulators and transmission line tower members, and construction of transmission lines across the two sections. The project is scheduled to be completed in the next 18 months.

L&T is currently in the process of restructuring its ECC division and has split the division into four independent units. The four groups within the ECC are buildings and factories; infrastructure; minerals, metals and water; and power transmission and distribution. The units commenced independent operations from July 1, although the split will not be formalized until two years from now. Boston Consulting Group is overseeing the process.

The groundwork for restructuring L&T's ECC division began in 2003. The ECC division, which consisted of 16 strategic units that provided engineering and construction services across sectors, had grown tremendously, necessitating the split. The new divisions will function as associate companies or subsidiaries to the ECC division.

The ECC division is aiming to achieve a turnover of $4.5 billion in the current fiscal year, which is nearly twice its turnover of 2006-07. ECC achieved a turnover of $3.25 billion in 2007-08, a 37% increase over the previous fiscal year. Each of the four independent units has a current annual turnover of $750 million to $1 billion. L&T intends to list the independent units on stock exchanges after they attain a minimum annual turnover of $1.25 billion each.

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