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Bihar elections - the Rajaji formula worked Cleaning Ganga – relocate tanneries and install electric crematoria Where is Rajaji? TN – agglomerate land holdings without alienating ownership PC’s preference for professionals Lesson from Chandrababu Naidu Strengthen the base... Like Hinduism: many paths to reach God... For whom the bell tolls? TELANGANA at last…BUT More Shakthi to Das’ elbow Shanti and Sadhana through Music GM Technology at last! Infrastructure funding – lessons learnt Tax agriculture Solar thermal shines… Increasing non co-operation of state leaders A rich pool of talent not utilised…. The nuclear option Airlines in India: cost and space Which side are you, Montek? Permanent secretariat for TN GIM Convulsions in The Hindu Kudos to NDTV... Eternal support for capitalisation of PS banks London, London Narayan Marketing expert Balagopal is no more Paytm karo... 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Polls and promises Waning interest in public discussions… When nations steal growth from one another… Make standards certification mandatory... The rise and fall of Annamalai University Valli, they are more marginalised Limit foreign borrowings to hi-tech, export potential projects... Small units prefers to remain small... Delhi is distant He saved millions from starvation... Muffled voices for merit… Poor representation for Kerala and TN in Cabinet Making ‘my Amaravati’... Editor's Notes Liberal imports idling indigenous capacities Streamlining mandatory third party cover Telangana in top gear… CIPET hqrs to stay at Guindy – for the present? Why this malaise in medical education? Fuel for thought Mu Sigma – is no more Plummeting profits of PSBs A C Muthiah – his munificent bequeaths to science Music happens Godspeed, Chief Minister JJ Build close rapport with business leaders Bihar – Nitish Kumar adopts the Lalu model
 
L&T- the specialty of special purpose vehicles

A decade ago, engineering and construction giant Larsen & Toubro conceived a bold, new plan: to form separate subsidiaries or special purpose vehicles to focus on new projects. This enabled the company to access and acquire expertise in new areas such as toll roads and bridges, airports, seaports, metro and rail systems.  I remember the foresight and passion with which A Ramakrishna (AR) explained this foray.

Of course, such a pioneering effort, involved certain business risks. AR took efforts to explain the benefits of the toll road concept, which found resistance in the initial period. In quick time, the concept gained acceptance and opened the floodgates for massive expansion of quality road network. With handsome funding by the private sector, road construction recorded growth as never before.

Equally innovative was the lead taken by L&T ECC to form a separate company for the construction of the Bengaluru airport. Its reputation and record were helpful in ensuring participation by reputed global companies. This experience was a big stepping-stone for taking up construction of the much larger airports at Delhi and Mumbai.

Such enterprise extended to form more such companies. The large Dhamra Port in Odisha in partnership with the Tatas is another major venture. K V Rangaswamy who headed the construction division pointed to L&T gaining rich expertise in such diverse fields for engineering and construction, build value and sell its share in such projects to good profit. The company thus derives twin advantages: getting  orders for constructing such large projects and on completion, to sell these at profit.

The L&T Shipbuilding Ltd on which L&T has invested around Rs 4000 crore is another example of a handsome diversification. This project has three components: an engineering unit, shipbuilding cum repair facility and a container port. The present recessionary conditions come in the way of full utilisation of the niche facilities created. With the expected turn around of the economy, the operations would become profitable.

 The construction division had been accounting for around half the revenues of the giant corporation. With the slowdown in the economy affecting the manufacturing sector in the current year, the construction division may account for larger share, of around 75 per cent, of the revenues of the corporation.

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