Saint-Gobain of France and Owens Corning of the US have initiated talks with Larsen & Toubro Ltd. for acquiring the latter“s packaging and glass containers unit, a senior official of the company said…
Saint-Gobain of France and Owens Corning of the US have initiated talks with Larsen & Toubro Ltd. for acquiring the latter“s packaging and glass containers unit, a senior official of the company said. L&T has retained the services of domestic merchant banker DSP Merrill Lynch to undertake a evaluation of the unit. As part of restructuring to convert itself into a premium conglomerate, L&T has decided to “reduce” its exposure in non-core units and has therefore, put them up for sale. A senior official of the company had visited the Saint-Gobain office in France and held discussions regarding the sale of the unit, sources in the company said. Both the multinationals are interested in the L&T packaging unit as it is synergistic with their operations in India. L&T chief executive officer and managing director A. M. Naik said “We have enough expertise within our company to deal with the sell off and we have an in-house panel of legal experts to structure the deal.” In 1998-99, despite severe competition, the bottle business registered good growth. The company developed a novel decoration system for crowns as part of concentrating the sale of high quality glass containers to customers in the soft drinks, processed food and pharmaceutical industries. In 1998-99 the division manufactured 256.6 million units registering a total value of Rs 73.21 crore. The company also manufactured 844.8 million crown cork units valued at Rs 23.48 crore. Recently the Boston Consulting Group identified packaging and Tengel as L&T“ s non core areas and cement and IT business as the company“s thrust areas for future. It also identified EPC and another five businesses as the core areas. Both Owens Corning and Saint-Gobain have a presence in India. Saint-Gobain had acquired majority control in their domestic joint venture Maharashtra Glass & Agro to 75.5% from the earlier 51% by buying out the unsubscribed portion of the rights issue. The US$ 4.5-billion Owens Corning recently acquired a 25% stake in Mahindra & Mahindra-controlled Siro Plast located in Pune. It also has another joint venture company with M&M, Owens Corning (India) Ltd. Siro Plast manufacturers sheet moulding compounds (SNC) and dough moulding compounds (DMC), which are used as glass reinforced thermosetting compounds.