L&T ready to start bank network: Naik
Construction major Larsen and Toubro is readying to enter the banking space through its subsidiary, L&T Finance, following the government move to allow new private banks.
"We believe that L&T has the right opportunity now to start a bank," said A M Naik, chairman, while addressing shareholders at the company's annual general meeting here today.
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The Reserve Bank of India (RBI) had recently released a discussion paper on the entry of new banks in the private sector and L&T would give its inputs by the end of September. The final policy document might come in December, he said.
Naik said L&T Finance, which is into both corporate and rural finance, is already one of the three largest non-banking finance companies in India.
"People have trust and confidence in us, which is a good reason for us to go into banking," Naik said. L&T is also planning to launch the initial public offering of L&T Finance by the end of the year. The company is in discussion with investment bankers over this.
The IPO would go ahead irrespective of plans to enter the banking sector. However, it would take these into account as when these plans crystallise. "We will see how we can structure the company, now that we are so close to it," Naik said.
Other subsidiaries of this infrastructure major could also make their debut, going ahead. It plans to unlock value in its information technology business in the first quarter of next financial year. Infrastructure development projects could be next in line for entry into the capital markets. Last month, the company bagged one of its biggest projects, to develop the Hyderabad rail metro network, at a cost of Rs 12,132 crore.
Meanwhile, the board of directors wouldo be looking for the next chairman, as Naik is to retire in 2012. His successor would be announced six months before he retires. The company is already working with two consulting companies to search for its next leader.
"This process has seen the maximum attention of the entire board and me, too. After working in this company for so many years, I would want it to be led by a person who supports the growth of this company," Naik assured the shareholders.