Larsen & Toubro (L&T) has more than doubled its consolidated net profit to Rs.967 crore for the first quarter ended June 30, 2014, from Rs.459 crore in the year-ago period.
The profits went up sharply due to monetisation of Dhamra Port in which the company had 50 per cent stake and gains of Rs.249 crore due to sale of part of promoter’s holding in L&T Finance Holdings to comply with the Securities and Exchange Board of India (SEBI) norms and disinvestment in City Union Bank by L&T Finance.
Beating analysts’ expectations, the company reported a 10 per cent growth in revenue at Rs.18,975 crore against Rs.17,241 crore in the same period last year. International revenue at Rs.4,781 crore constituted 25 per cent of the total revenue.
Order inflow also increased by 11 per cent to Rs.33,408 crore from Rs.30,016 crore. The company’s order book position during the quarter increased by 13 per cent to Rs.1.95-lakh crore from Rs. 1.73-lakh crore in the year-ago period.
Monetisation of Dharma Port yielded Rs.1,350 crore to the company’s bottom line and most of this gain was wiped by provisioning of Rs.900 crore towards cost and time overrun of five projects being executed by L&T’s Hydrocarbon business in the Middle East.
Hydrocarbon business
“The hydrocarbon business contributed negative performance. In the quarter, we have taken a hit due to cost and time overrun in two upstream and three middle downstream products being executed by this business. Most contracts are fixed price and we have done a provisioning of Rs.900 crore. We have taken adequate steps to prevent such experience in the future,” said R. Shankar Raman, Chief Financial Officer (CFO).
He said despite upbeat market sentiment after change in government at the Centre, much of the ground reality remained the same.
“The condition in the domestic market remained sluggish and most of the orders came from infrastructure and hydrocarbon sectors.
“We are still awaiting tail winds to witness improvement,” Mr. Raman said.
During the quarter, the company added 6,000 employees and as a consequence staff cost went up by 12 per cent, interest expenses went up by 10 per cent and the overall cost structure remained stable.
