Larsen & Toubro has reported a 25 per cent drop in order inflow at Rs 13,666 crore for the December quarter, primarily on deferment of orders and postponement of contracts from private and Government sectors. The order inflow in the same period of last year was Rs 17,793 crore.
However, the company posted an 11 per cent rise in net profit at Rs 841 crore for the quarter-ended December 31, 2010, against Rs 759 crore logged in the same period last year. Revenues were up 40 per cent at Rs 11,413 crore, compared with Rs 8,145 crore.
Mr Y.M. Deosthalee, Chief Financial Officer, said a substantial number of orders that have been deferred were expected to be decided in March; and if they come through it would ensure that the guidance of 20 per cent growth in sales and 25 per cent in order was maintained. In case they spill over to the next fiscal, the projected figures would be impacted.
A variety of reasons had impacted the decision-making by customers — environmental clearances, land acquisitions, statutory approvals and financial closures. The deferment was across sectors such as roads, power, hydrocarbons, fertilisers and railways, he said.
Operating profit margins took a dip at 10.85 per cent against 12.36 per cent, which he said should not be seen in isolation. As such the margins for the nine-month period of this fiscal stood at 11.4, which was identical to the same period of FY10.
Rising commodity prices, he said, were an area of concern and impacting the electrical businesses in particular. About a third of the contracts did not include an escalation clause because of which L&T had to absorb the hike in input costs. L&T's order book stood at Rs 1,14,882 crore as of December 31 of which the engineering and construction segment alone accounted for Rs 1,12,498 crore.