Infrastructure conglomerate Larsen and Toubro (L&T) on Thursday said it may write off some of its “slow moving orders” but that will not impact company’s revenues.
In a filing to the stock exchanges, L&T said that “the company evaluates its order book on a regular basis. The slow moving orders in that process may be removed to enable carry forward of healthy backlog of orders... Removal of such orders has no impact on revenue”.
It, however, did not quantify the orders that are going to be trimmed, but said that “the new orders which the company has received has compensated for any such removal of orders”.
It also clarified that L&T is not negotiating with its clients for this process.
Reports had said that L&T is planning to write off orders worth about Rs. 15,000 crore for the last fiscal.
A company official, however, said that it is difficult to give any figure at this stage as consolidation of accounts has just started. Any number, pertaining to removing orders, would get announced when fourth quarter results will be published, he said.
Following the news, company’s shares on Thursday fell by 0.77 per cent to close at Rs. 1,290 a piece on the BSE. In the morning trade, company scrip had plunged to a low of Rs. 1,255.
On January 22, while announcing its results for the October-December quarter, the company had indicated that it may write off orders worth about Rs. 9,000 crore as most of them are not moving due to various issues, including want of clearances or other issues.
The company, which had posed over 22 per cent growth in standalone profit in Q3, had also lowered its guidance for order inflows by 5 per cent to 15 per cent for the fourth quarter, saying it would be challenging to meet the revenue target due to macroeconomic headwinds.
“Due to the challenging macroeconomic conditions, we believe it will be difficult for us to meet the target of 20 per cent order-book growth. We would revise it to 15 per cent now. Similarly, there is a fighting chance of meeting the sales guidance for the fiscal at 15 per cent,” L&T Chief Financial Officer Shankar Raman had said.
He had also said that by December, L&T had booked orders to the tune of Rs. 57,000 crore and to reach the target, it would need another Rs. 30,000 crore worth of orders.
A compilation of L&T’s public announcements since January showed that it has won orders worth Rs. 16,350 crore in last 3 months, well short of targeted Rs. 30,000 crore. As on December, 2013, the company had a total order book of Rs. 1,71,184 crore.