Skanska AB in exit mode

Skanska AB, a Swedish construction company, is looking at exiting its Indian operations. The company is exploring the possibilities of divesting its 80.37 per cent stake in its Indian arm - Skanska Cementation India.

In an emailed reply to <b><font color="red">Business Standard</b></font>, Peter Gimbe, spokesperson, Skanska AB, said, "We are exploring the possibility of divesting our stake. The reason for this is that Skanska's global strategy is to achieve a leading position in selected geographical core markets. In India, we don't have a leading position today. When exploring the possibility to divest our stake in the company, we are of course talking to possible buyers."

Skanska Cementation India posted a turnover of Rs 564.2 crore for the year ended December 31, 2003, and a net profit of Rs 3.89 crore.

However, the company has been reporting net losses for the first two quarters of the current year. While the net loss in the first quarter ended March 31, 2004, stood at Rs 4.8 crore, the net loss in the second quarter was up at Rs 5.2 crore. Net sales for the first quarter were at Rs 169 crore, while net sales in the second quarter stood at Rs 143.2 crore.

Industry sources said, "The promoters of Skanska have taken the decision to divest their stake, since the Indian company's profits have been on a decline since the last couple of years and the company has reported losses for the last two quarters."

The Skanska spokesperson, however, denied that the divestment was due to the company reporting losses. "No, our reason to exit is only in line with our global strategy of either strengthening our position in the country significantly or withdraw," he said.