L&T asks J P Morgan, DSP Merrill Lynch to advise on demerger

Larsen and Toubro Limited (L& T) has appointed investment bankers J P Morgan and DSP Merrill Lynch to advise them on the proposed demerger of its cement division.

L & T president and whole-time director Mohan Karnani said in Durgapur on Friday that the new company would be known as L&T Cement Limited after the demerger. The cement division of L&T, a major engineering company, contributes roughly 26 per cent of the total revenue of Rs 80 billion.

Karnani said the demerger would be made to enhance shareholder value of L&T.

He added that based on the advice of the investment bankers which is expected to submit its report within five months, part of the equity of the new company would be transferred to L&T shareholders.

Earlier the L&T board had approved in principle the demerger proposal. The demerger, expected to enhance shareholder value of L&T, would be over by March 2001, he said.

L&T had earlier spun off its information technology division into a separate company L&T Information Technology Limited.

Karnani said L&T is also looking for a partner for striking an alliance for its cement outfit. The equity structure of the cement would be decided by the investment bankers.

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