According to newspaper reports, Larsen & Toubro (L&T) is picking up a 10% stake in Tullow India, the Indian arm of the Irish oil exploration and production company Tullow Oil. L&T has picked up the stake in exchange of handing over its assets in two oil exploration blocks in Gujarat.
L & T is the largest engineering, procurement and construction (EPC) company (58% of total revenues) in India. The company also has major business interests in cement (24% of total revenues, capacity 12 mtpa), and software.
Tullow India holds exploration and production licenses of oil and gas fields in India, covering 25,000 sq. km. L&T's stake of 10% stake will give it an interest in seven licenses in India.
L&T's decision seems to be inspired from a strategy to play a larger role in the exploration and production of oil and gas in the country. If it had not been for this deal, the company's presence in the sector would have been limited to just two fields. Moreover, having a 10% stake will definitely be an advantage in selling its engineering products for exploration and production activities.
Larsen & Toubro (L&T) has announced third quarter results of financial year 2016-2017 (3QFY17). The company has reported 1.7% YoY growth in sales while profits have grown 38.9% YoY. Here is our analysis of the results.
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