Rediff.com« Back to articlePrint this article

L&T shuts down packaging business

September 24, 2003 09:56 IST

Larsen & Toubro has shut down its packaging business as part of a portfolio restructuring.

The engineering and construction major, after having decided on the demerger and sale of its 16 million tonne-plus cement business, is now reviewing the operations of its small-sized businesses as well.

While the first to come under the scanner is its packaging business, the next in line is its glass business, while several other small businesses are to examined in terms of financial viability.

The company is primarily evaluating its less than Rs 100 crore (Rs 1 billion) businesses which are more of a drag in terms of their ability to contribute to the company's bottomline.

L&T's director and CFO Y M Deosthalee said: "We have shut down the packaging businesses as operations had become unviable. All the 100-odd employees have accepted a voluntary retirement scheme."

On the glass business, Deosthalee said: "We have been keeping a watch several businesses including the glass division. Fortunately, it has performed quite well in the last couple of quarters. So the business continues."

L&T had been looking to find a buyer for its packaging business, which contributes around Rs 200 crore (Rs 2 billion) to its total turnover of around Rs 8,000 crore (Rs 80 billion).

L&T's packaging unit markets a variety of bottle closures manufactured at its plant in Powai, Mumbai.

Though L&T is a significant player in packaging, it was a low margin business hardly contributing much to its bottomline.

The company, in its attempt to revive the business, was also looking at manufacturing new products at its existing facility. All efforts, however, seem to have failed.

Apart from heavy engineering and construction, the company's focus areas include information and technology and defence equipment manufacturing.

It also plans to diversify into aircraft-parts manufacturing, nuclear valves, ferro-manganese castings, among others ventures.

The company's packaging product range includes 'Intact' crown caps for soft drinks and beer, 'ProTec' roll-on-pilfer-proof caps for liquor and pharmaceutical products, 'VacuSeal' caps for processed food and 'fresh Top' beverage caps for carbonated drinks.

The company's glass unit markets high quality glass containers manufactured at its glass works at Nashik, Maharashtra, set up in technical collaboration with Vetropack, Switzerland.

The containers are used for soft drinks, cosmetics, processed foods, pharmaceuticals and liquor.

The engineering and construction, cement and electricals business contributes 59 per cent, 28 per cent and 9 per cent to the total turnover of the company.

The other businesses account for around 4 per cent of the turnover.

Arijit De & Rumi Dutta in Mumbai