Financial Daily from THE HINDU group of publications
Tuesday, Dec 03, 2002
Financial Daily from THE HINDU group of publications Tuesday, Dec 03, 2002 |
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Corporate
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Outlook L&T targets 25% rise in export earnings Our Bureau
MUMBAI, Dec. 2 ENGINEERING and construction major Larsen & Toubro Ltd (L&T) is looking at higher exports to enhance its topline. It has targeted a 25-30 per cent earnings from exports over the next three years. In 2002-2003, L&T hopes to see exports contributing a 17-18 per cent share to its topline, projected to grow at 15 per cent. Faced with a scenario of few domestic projects, the company has been steadily growing its presence in the international markets, a senior L&T official said. In fact, for the second quarter of 2002-2003, L&T reported a 155 per cent jump in export to Rs 807 crore compared to Rs 319 crore in the year-ago period. According to a company statement, the highlight of the quarter's performance was the substantial growth of export turnover. The share of L&T's export earnings in its turnover has been on the rise, from 3 per cent two years ago to 11 per cent last fiscal and now, a 17-18 per cent share for current fiscal. Margins earlier very low and less than levels in the domestic market, have improved to a position where it is on par, the official said. Many of the orders are now coming in from developed countries, such as the US and European nations. The company's international business took time to develop because of the process involved in establishing credentials. However, the risk involved in international business is high, ranging from country to customer and payment risk. Its growing export business has altered L&T's perspective towards the level of forex borrowings it can afford to carry. Currently, the company's forex borrowing is pegged at about $150 million. The thinking now is that a level of $150-200 million is not a worrisome figure for L&T. Otherwise, its total debt is due to be reduced by a further Rs 350 crore or so this fiscal, with average cost of borrowing hoped to touch a level of "not more than 8 per cent".
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