Infrastructure conglomerate L&T has posted a 12 per cent drop in net profit at Rs 756 crore for the June quarter, despite a five per cent rise in revenues. This was primarily due to lower margins.

Earnings before interest, tax, depreciation and amortisation (EBITDA) margins dipped 0.6 per cent from 9.1 per cent to 8.5 per cent. The five per cent rise in revenue, at Rs 12,555 crore, was insufficient to make up the shortfall.

Other income, from dividends and interest, was also down to Rs 472.60 crore from Rs 608 crore. There was also a forex loss of Rs 200 crore, largely due to a loan balance and unhedged payables and receivables, the company said.

R. Shankar Raman, Chief Financial Officer, said though the infrastructure and hydrocarbon businesses led the earnings, there was sufficient under-recovery in other business segments, due to under utilisation of capacities.

Raman said it was difficult to quantify the under-utilisation, but added that the investments made by the company were to keep pace with the eight per cent growth of the country’s economy. When growth dropped to five per cent, capacities were bound to go unutilised, he added.

The power business which was about Rs 25,000 crore, is now only Rs 14,000-15,000 crore. So, the capacities built for the business to some extent would have to remain idle, he said.

K Venkataramanan, Managing Director, said despite the challenging period, the company had exceeded on the order booking front. Though revenue growth was lower than expectations, it would catch up in the next two quarters, he added.

On Monday, the company scrip closed 7.46 per cent down at Rs 901.25 on the BSE.

shanker.s@thehindu.co.in

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