Larsen & Toubro strengthening its focus on real estate team

MUMBAI: Engineering and construction conglomerate Larsen & Toubro is strengthening its focus on its real estate team. The company is set to merge its urban infrastructure and real estate units as part of a business realignment strategy, senior officials said on condition of anonymity.

L&T owns 75% stake in L&T Urban Infrastructure, which builds residential and commercial infrastructure facilities, including IT parks. L&T Realty is its wholly owned subsidiary.

According to property consultants, the merger would spell good news for the company's current projects especially the Navi Mumbai mixed use development where it recently received a rap from the Comptroller and Auditor General of India (CAG). The company is learnt to have over 25-million sq ft of projects spread across over 1,000 acres of land across India.

The CAG in its report had said the state government had extended undue benefits of about Rs 464 crore to L&T on incomplete projects on the development of an integrated complex at the Seawood railway station in Navi Mumbai. CAG says despite no progress on the work, Cidco's board of directors had accepted L&T's request in August 2009, without approval of the government, for an extension of three years on delayed payment charges.

The developer agreement for the Seawood project was signed on April 21, 2008. L&T paid a lease premium of Rs 724 crore of the total amount due of Rs 1,809 crore. The balance lease premium was to be paid in instalments due on April 2009, 2010 and 2011. However, Cidco, after considering the delay in handing over of the site to the developer, extended the due date of payment from April 21 to June 24 every year, said CAG.

Senior L&T officials had said the delay was due to a dispute between Cidco and Central Railway (CR), due to which the latter did not accord permission to commence the project. ``The project started after CR granted its approval only in August last year and L&T had started the work right after. Since 2008, L&T had spent Rs 1,000 crore on the project,'' senior officals said.

Source: http://timesofindia.indiatimes.com/city/mumbai/Larsen-Toubro-strengthening-its-focus-on-real-estate-team/articleshow/14278978.cms