L&T to buy Rs 1000 cr raw materials from China

Initiative in line with the company's strategy to cut manufacturing costs.

Engineering and construction major Larsen & Toubro (L&T) will source raw materials like plastic, steel and copper worth Rs 800-1,000 crore from China.

This initiative is keeping in line with the company's strategy to cut manufacturing costs in various ways.

At present, the company sources its raw materials from within the country. However, with the rise in the cost of plastic and metal prices in the domestic market, L&T is looking at cheaper bases outside the country for raw material sourcing, said the company chairman A M Naik.

"Sourcing raw materials from China would help us reduce our total expenditure on raw materials by at least 15 per cent," said Naik.

Besides, L&T is eyeing China as a major manufacturing and marketing base.

In August last year, it had announced plans for setting up a greenfield project in China for manufacturing high-end circuit breakers.

The company will invest $11 million in the project. Naik further said the company would also invest Rs 600 crore over the next six months for the expansion of its IT subsidiary L&T Infotech's existing IT campuses in Mumbai, Bangalore and Chennai, as well as setting up of new campuses in cities like Baroda and Pune.

"The investments are part of ongoing expansion of L&T Infotech. Our IT centres are spread across various places within a city. We would like to consolidate and bring them under one location," said Naik.

L&T Infotech, which has six IT centres in India and one in the US, reported revenues of about Rs 600 crore for the year ended March 2005. Its domain activities include sectors such as banking, financial services, insurance, communications, embedded systems and manufacturing.

L&T will, on the whole, invest Rs 1,200 crore over the next eight to 12 months.

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BLUEPRINT

SOURCING inputs from China will help L&T reduce its raw material costs by at least 15 %

Rs 1,200 cr investment planned for local expansion over the next eight to 12 months