L&T To Spin Off Engineering Services Division

The long drawn out plan of the Larsen & Toubro (L&T) management is finally likely to see light of day. In a recent development, the engineering giant has said that it is looking forward to spinning off its engineering services division and take it public in the next few years.

It has been heard that the spin-off may come into force beginning April 2014. This division of L&T earns close to Rs 1900 crore in terms of revenues and has an employee base of around 9000. In fact, L&T's engineering services business ranks among the highest in its niche.

The companies in the space are typically smaller because the deal sizes are not of the scales as seen in the IT services industry. A large deal would typically be in the region of about USD 25 million compared to the orders worth hundreds of millions of dollars in IT services. The business, which gets over 60% of its revenue from the US, is now close to sewing up an acquisition.

Following this news, the stock prices have gone into the negative zone. At this point of time the stock is trading at Rs 819 declining by 1.39% on the BSE.