L&T first quarter net profit more than doubles

Monetisation of Dhamra Port and stake sale help Larsen and Toubro (Land T) has more than doubled its consolidated net profit to Rs.9670000000 for the first quarter ended June 30, 2014, from Rs.4590000000 in the year-ago period. The profits went up sharply due to monetisation of Dhamra Port in which the company had 50% stake and gains of Rs.2490000000 due to sale of part of promoter’s holding in Land T Finance Holdings to comply with the Securities and Exchange Board of India (SEBI) norms and disinvestment in City Union Bank by Land T Finance. Beating analysts’ expectations, the company reported a 10% growth in revenue at Rs.18,9750000000 against Rs.17,2410000000 in the same period last year. International revenue at Rs.4,7810000000 constituted 25% of the total revenue. Order inflow also increased by 11% to Rs.33,4080000000 from Rs.30,0160000000. The company’s order book position during the quarter increased by 13% to Rs.1.95-lakh0000000 from Rs. 1.73-lakh0000000 in the year-ago period. Monetisation of Dharma Port yielded Rs.1,3500000000 to the company’s bottom line and most of this gain was wiped by provisioning of Rs.9000000000 towards cost and time overrun of five projects being executed by Land 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.9000000000. 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%, interest expenses went up by 10% and the overall cost structure remained stable.