Mumbai: Engineering major Larsen & Toubro's outgoing Chairman A M Naik has laid out a five-year road map to become an "asset-light" entity with revenues of Rs 2 lakh crore by 2020-21.
The company has identified a few non-core assets and is waiting for the opportune moment to sell them off, the chairman said while outlining his vision for a leaner L&T in times to come.
Addressing shareholders at the company's 71st annual general meeting hereon August 26, he said, "I would like to take this opportunity to share my vision of L&T of tomorrow... Our goal is to achieve a revenue of Rs 2 trillion by 2020-21 without compromising on margins and achieving an order inflow in excess of Rs 2.5 trillion per annum."
Naik, who is due to retire on September 30, 2017, talked about the unfinished agenda, but his priority is to make the company asset light and restructure small businesses.
"There is still so much to be done, but one thing is asset light and putting in top gear all the restructuring which is left of small businesses that are still part of L&T due to the bad world-wide market. They have to be sold or tackled strategically," he told reporters after the AGM.
The company is restructuring its projects division -- L&T IDPL -- and Naik hopes the process will be completed by March next year.
"In general insurance, we have sold the business and we hope it will go out (from the books) in the next 10 days. We have already sold Kattupalli port project that was asset heavy. Once we have finished restructuring the main ones, we will then look at selling the Nabha power project in Punjab," Naik said.
For the Nabha project, according to Naik, the company will have to wait till the legal problems, claims and counter claims are resolved and it might take more than a year to get settled.
L&T is reportedly in talks with the Adani group to sell the project at an estimated value of around Rs 3,000 crore. Naik expressed confidence that with the economy starting to turn around, this target is achievable provided a right strategy and on-ground execution is in place.
As part of sharpening the business focus, Naik spoke of the company identifying select growth businesses in L&T's broad portfolio. These include IT, technology services, defence, smart world and water management.
"Our strategic plan involves re-allocation of resources - both talent and capital - to businesses with visible value creation potential. As most of these are also asset-light businesses, the initiative will be in line with our larger objective of building an asset-light organisation."
