Schneider Electric, a global player in energy management systems and automation and MacRitchie Investments, have collectively entered into a definitive agreement with Larsen & Toubro for an all-cash consideration of Rs 14,000 crore. The leading Indian conglomerate to buy its electrical & automation business excluding their marine business unit and Servowatch Ltd, which are currently part of the E&A business of L&T which is a going concern on slump sales basis.

                                    

The business of Schneider in India is conducted through 6 legal entities,  i.e, SEIPL (Schneider Electric India Private Limited), Schneider Electric Infrastructure Limited (SEIL), Schneider Electric President Systems Limited (SEPSL), Schneider Electric IT Business India Private Limited (SEITB), Luminous Power Technologies Private Limited (Luminous) and Schneider Electric System India Private Limited (SESIPL) which is collectively called Schneider India.

Hence, the primary objective behind the acquisition for Schneider was that they wanted to increase their footprint in India and with the help of Larsen and Toubro’s strong domestic reach, coupled with its end-to-end research and development, it was a mere stepping stone for them. But at the same time, L&T aims to focus on its core business activities which include the target business.

The proposed combination will harness the strength of the combined entity to address the energy, electrical and home automation requirements of consumers in India.

Now the question arises, how will this acquisition help in economic development?

This proposed combination allows Schneider India to offer more comprehensive product range and solution to the Indian consumer. The combined business will be well positioned to serve the fast-growing Indian LV (low voltage) and Industrial automation market.

Moreover, it will help Schneider to move towards the tier II and tier III helping them pan their services over 260 additional cities. Moreover, this business expansion benefits the two companies with portfolio and price point of view. Schneider will also contribute in ‘Make In India’ by their production and solution to customers and promote India as a strong R&D hub.