Engineering giant Larsen & Toubro Ltd (L&T) has decided to offload its entire 51% stake in subsidiary L&T Kobelco Machinery Pvt. Ltd to its joint venture partner as part of a strategy to exit non-core businesses.
Japan-headquartered Kobe Steel Ltd will now take full control of L&T Kobelco Machinery.
In a stock-exchange filing, Mumbai-based L&T said the value of the transaction stood at Rs 43.5 crore ($6.3 million).
The agreement for the divestment was struck on Tuesday and the sale of shares is expected to be completed by the end of this month, it added.
Set up in 2010, L&T Kobelco Machinery manufactures rubber mixers and twin screw rollerhead extruders used in making tyres. It reported revenue of Rs 82.03 crore in 2017-18, which accounted for 0.07% of L&T’s consolidated total income for the financial year.
The company had reported a net worth of Rs 40.13 crore as on March 31, 2018.
L&T has been selling non-core assets to revive growth hurt by stalled industrial projects and a slow private-sector investment cycle in recent years.
Last year, for instance, it agreed to sell its electrical and automation business to a consortium of France-based Schneider Electric SE and Singapore state investor Temasek Holdings Pte for Rs 14,000 crore ($2.1 billion).
The $17 billion L&T group has interests in infrastructure, power, finance, real estate, defence, heavy engineering and hydrocarbon, among others. It has identified four services businesses – information technology, technology, finance and real estate – as core growth drivers.
It is currently engaged in a tussle to acquire IT services firm Mindtree Ltd, whose promoters are attempting to thwart what they consider a hostile takeover bid.