Schneider Electric drives ahead with mission to boost economy in India with purchase of Larsen & Toubro’s Electrical and Automation arm
After two years, Schneider Electric has completed their purchase of Larsen & Toubro’s Electrical & Automation business to drive forward their mission to boost economic growth in India.
L&T’s Electrical and Automation arm will be combined with Schneider Electric India’s Low Voltage and Industrial Automation Product business to create Schneider Electric India Private Limited (SEIPL).
“This major strategic move will make India, Schneider Electric’s third largest business in the world, and one of the four major global Schneider hubs for global R&D and manufacturing,” said Jean-Pascal Tricoire, the Chairman and CEO of Schneider Electric.
The new merged company will focus on the main priorities and initiatives of India, including Make in India for India and the rest of the world, Digital India, Skill India, Sustainable Energy, Smart Cities and Infrastructure for self-reliance.
Schneider Electric will have a 65% share in SEIPL, while global investment firm Temasek will own the remaining 35% stake in the company.
“We are also proud to partner with Temasek, who bring along their deep knowledge of India, and their coaching to help developing the export of the company,” added Mr. Tricoire.
More than 5,000 employees from L&T’s automation business will be integrated with over 2,000 Schneider Electric employees under the helm of the newly appointed CEO of SEIPL, Anil Chaudhry, the current Zone President and Managing Director for Schneider Electric India.
“Anil Chaudhry will lead the new entity as its CEO and bring his deep expertise in digitisation and electrification as well as his passion for the cause of digital solutions for efficiency and sustainability,” said Mr. Tricoire.
The team at SEIPL will go to market with their two distinct portfolio brands, sales teams and partner networks to achieve their vision of boosting India’s economic growth and supporting the Government’s mission to become a self-reliant nation.
Part of India’s initiative to achieve this is through ‘Make in India’, which looks to drive the country as a dominant innovation and manufacturing hub both locally and globally.
L&T’s Electrical and Automation business will continue to work with an ecosystem of partners covering more than 260 cities to produce its low and medium voltage switchgear, electrical systems, energy management, metering and industrial automation solutions at five manufacturing locations in India.
The significant and complex divestment all-cash sale of the Electrical and Automation arm was originally announced back in May 2018 at a price of US$191.6 million.
“The challenge was to carve out a business of this scale, with minimum disruption to the sprawling customer base and do it all amid the constraints of a pandemic,” said A.M. Naik, the Group Chairman of L&T.
L&T’s exit is part of a long-term strategy to focus on their Engineering Procurement Construction and Services business by using the proceeds for undetermined capital allocation decisions.
“This all-cash deal will help us create a much stronger balance sheet, thereby creating long-term value opportunities for our stakeholders by focusing on key aspects of business,” said S.N. Subrahmanyan, the CEO and Managing Director of Larsen & Toubro.
The sale is said to be one of L&T’s largest divestments so far in terms of value.
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