L&T sees cement up 7% in FY09

Company to unlock value in IT, infrastructure subsidiaries.

Engineering major Larsen & Toubro sees cement prices rising 5-7% in financial year 2008-09, while steel prices are expected to stabilise, according to Chief Financial Officer Y M Deosthalee.

In an interview, Deosthalee, said,"Cement (price) is seen rising by 5-7% in 2008-09. But 2009-10 will be a year where there may be an excess supply situation... prices may come down then," he said.

Although steel companies have been raising product prices in the past few months due to rising prices of iron ore and coking coal, Deosthalee expects them to stabilise in the next financial year.

Prices of iron ore and coking coal, the critical ingredients in steel making, have been on the rise as demand has consistently outstripped supply.

"When we bid for projects, we make these assumptions," Deosthalee said.

The engineering conglomerate, with interests spanning from construction, shipbuilding, power, information technology to financial services is considering the prospect of unlocking value in some key arms.

"There are possibilities of value unlocking in the L&T group. The immediate possibility is in the IT business," Deosthalee said.

The company plans to list its information technology arm on the bourses in 2008-09 "depending on the market condition". The company had earlier said aimed to raise $300 million (Rs 1,180 crore) through an initial public offer of L&T Infotech.

"There are two other candidates for value unlocking. We will examine them but there is no immediate thought of doing anything," Deosthalee said.

These two entities are L&T Infrastructure Development Projects (IPDL) and the company's financial services arm, he said.

"Most of the projects of IDPL are under construction. We would like to see steady cash flows to the entity and then we would list it," he said.

The financial services arm will focus on the infrastructure sector, with the insurance division looking at the insurance needs of the sector.

"We have not decided anything on the insurance business, but if at all we decide, we will look at property insurance...project insurance is a part of it," Deosthalee said.