Engineering Firm Invests in Indian Rental Company

Dec. 12, 2003
Indian engineering firm Larsen & Toubro is strengthening its construction and equipment manufacturing business by taking a 30 percent stake in NAC Infrastructure

Indian engineering firm Larsen & Toubro is strengthening its construction and equipment manufacturing business by taking a 30 percent stake in NAC Infrastructure Equipment Ltd., an equipment rental company based in Hyderabad, Andhra Pradesh, India, India’sEconomic Times reported last week. According to the report, this is the first time L&T has agreed to be a minority stakeholder, which reflects the growth potential of the rental industry.

According to a recent report by rental industry analyst Dan Kaplan, the Indian equipment rental market should boom from its current $25 million level to between $250 and $400 million over the next five years.

According to sources close to the deal, L&T is a major user of construction equipment, which it may be able to rent at more favorable rates from NAC now that it is a part owner.

The majority stakeholder in NAC, with about a 50 percent share, is Indian Infrastructure Equipment Ltd. Ingersoll Rand India Ltd. recently acquired about a 3 percent share of IIEL.

The Economic Times reported that 40 percent of all construction equipment sales in India are currently centered in Andhra Pradesh, a southern province, where highway projects have progressed more rapidly than in the north.