'L&T revives plan to sell valves unit, 3 PE players in the fray'

MUMBAI: Engineering giant Larsen & Toubro (L&T) has revived plans to sell its valves making business in a deal which could fetch the company Rs 3,000-4,000 crore and at least three private equity players, including KKR, are in the fray, three people close to the development told ET.

The $16-billion conglomerate has been scouting for an investor to sell L&T Valves for about two years and came close to shortlisting private equity major KKR last year, but the deal was not be sealed. L&T put the stake sale on hold as it focused on listing its two technology subsidiaries in 2016, while simultaneously working on improving the profitability of L&T Valves.


“L&T is not in a hurry to sell. It's not a distress sale. But with all the work that has gone into the valves business, it is now ready for the sale," an executive from L&T said on condition of anonymity .

“As a matter of policy, L&T does not comment on speculation," an L&T spokesperson said responding to ET's request for a comment.

Two L&T executives said the company implemented a strategic plan to restructure the valves business, which included changes in production process and operations to improve efficiency and profitability .

“KKR executives had even visited the Coimbatore plant, but somehow, it didn't work out. We hope that now we will be able to close the deal soon," another L&T executive told ET.

L&T has been exiting non-core businesses over the years and L&T Valves is the next subsidiary to be divested. The company has said it would sell non-core businesses and other businesses that are too small to raise a total of up to Rs 10,000 crore.

On April 22, L&T informed the bourses it has received National Company Law Tribunal's approval for demerger of its valves manufacturing business.

In the past, besides KKR, private equity firms Actis and Advent had also shown interest in the company. Finnish company Metso and US-listed Pentair had also explored buying a stake in the unit.

After the company resumed talks, a senior L&T executive said, at least three private equity players, including KKR, are in the fray .A KKR spokesperson declined to comment.

L&T Valves has been making industrial valves for more than five decades for oil and gas, power and other sectors. The division has a manufacturing unit at Coimbatore and reported sales of Rs 1,465 crore and profits of Rs 138 crore in 2015-16. L&T Valves is a part of L&T's machinery and industrial products business, which has been hurt due to the industrial slowdown and capex cut by global energy majors.

L&T has exited non-core business such as cement, fuel retail pump making unit, Dhamra Port project and joint ventures such as L&TCASE Equipment Private and Voith Paper Technology India. As a part of its 5-year strategic plan, which the company refers to as `Lakshya 3', it aims to double revenue by 2021 with focus on high growth businesses.