Larsen and Toubro posted a 14 per cent decline in net profit for the quarter ended September 30 due to shrinking margins, higher expenses and a forex impact of Rs 200 crore.
The company logged a 10 per cent improvement in sales, riding on a 32 per cent increase in exports to Rs 3,600 crore. Infrastructure and construction remained the mainstay, clocking revenues of Rs 7,181 crore, a 36 per cent increase over the same quarter last year, and importantly, with margins of 13.3 per cent.
Healthy order inflow
Order inflow was at Rs 26,533 crore, a growth of 27 per cent. International order inflows more than doubled to 43 per cent on the back of a few large project orders in West Asia.
The major orders were in the infrastructure and hydrocarbon segment.
L&T’s order book rose 11 per cent to Rs 1.76 lakh crore, as of September 30, 2013. International orders constitute 15 per cent of the total order book.
R. Shankar Raman, Chief Financial Officer, said the EBITDA margin variation would be 200 basis points between good and bad times, adding that the drop in the second quarter was about 90 basis points.
This was due to higher staff cost, currency fluctuation and input cost, besides under-recovery in certain segments such as the power business. Staff cost had gone up 22 per cent to Rs 1,579 crore, with over 4,000 people recruited since last September.
This apart, Raman said working capital needs had risen, accounting for 17 per cent of sales as of June and 18 per cent in September.
K. Venkataramanan, Managing Director, said there was room to make up, as two-thirds of the company’s annual sales always happened in the third and fourth quarters.
OUTLOOK
Raman said the macro-economic environment continues to remain weak and uncertain on account of the twin deficits, tight liquidity, persistent inflation and heightened volatility in the financial markets.
The company’s outlook statement said the investment climate is yet to show signs of recovery.
Deferral of new projects and delayed decision making/execution features in the weak performance of the core sector so far, it added.
Recent Government measures, such as improved allocation of resources to kick-start stalled projects, are, however, a welcome move to improve the investment sentiment, the statement noted.
The company continues to focus on emerging prospects in West Asia and other select markets as part of its strategy to hedge against the domestic slowdown and attain global competitiveness.
shanker.s@thehindu.co.in