L&T sells electrical and automation unit to Schneider

The divestment of Larsen & Toubro’s (L&T) Electrical and Automation (L&T E&A) unit has recently concluded in line with the company’s Strategic Portfolio Review

August 31, 2020

The deal worth US$ 1.93 bn will see Schneider Electric take ownership of the entity’s diversified business portfolio in the domain.

Low and medium voltage switchgear and electrical systems will continue to be a part of the product portfolio.

The Electronic Systems sector in India is expected to gain an economic value of US$ 100 - 130 bn by the year 2025.

Introduction of PLIs aimed at increasing the sector’s capabilities in manufacturing electronic components, ATMP units and mobile phones.

Following the announcement in May 2018, Larsen & Toubro’s (L&T) Electrical and Automation (L&T E&A) unit was acquired by Schneider Electric for an amount of US$ 1.93 bn, thereby marking the former’s exit from the domain of automation.  The deal will solidify Schneider Electric’s position as the custodian of an extensive business portfolio which includes products and solutions across energy management systems, low & medium voltage switchgear, industrial & building automation solutions and electrical systems. The divestment process which concluded in line with the provisions of Larsen & Toubro’s Strategic Portfolio Review is the recent addition to L&T’s record of divestment from previous business divisions in the insurance and infrastructure domain. Recognising the role of the deal in strengthening the company’s financials, Group Chairman, Larsen & Toubro, AM Naik remarked “The closure of divestment of the E&A business is a key milestone in our stated long-term strategy. The challenge here was to carve out a business of this magnitude, with minimum disruption to the sprawling customer base, all amid the constraints of the current pandemic”.

The Electronic Systems sector in India is expected to gain an economic value of US$ 100 – 130 bn by the year 2025, bolstered by robust domestic growth. The state-of-the-art R&D infrastructure within the nation has elicited participation from international entities. The sector also enjoys the benefits of 100% FDI under the automatic route. Recent policy announcements as part of the Atmanirbhar Bharat Abhiyan include the Production Linked Incentives (PLI), aimed at increasing the production value of mobile phones, electronic components, and ATMP units targeting a production value of US$ 1.55 trillion.  The Scheme for Promotion of Manufacturing of Components and Semiconductors (SPECS) is also expected to play a significant role in increasing the volume of manufacturing within the sector. With futuristic policies and the concerted participation of entities privately and publicly owned, the Electronic Systems sector in India can expect to be put on the path towards self-sufficiency.