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L&T net profit drops 67 pc in Q2 — Slump due to one-time gain in previous year

Our Bureau

Mr A.M. Naik

Mumbai , Oct. 28

Larsen & Toubro has reported a 67 per cent decrease in its net profit for the second quarter of the current fiscal; this was on account of a one-time profit of Rs 353 crore from sale of shares in its cement division that had plumped up its year-ago second quarter results.

Its net profit for the quarter amounted to Rs 143 crore as against Rs 437 crore.

Excluding the extraordinary items and gain from divestments, the company's net profit would have shown an increase of 42 per cent, said Mr A.M. Naik, Chairman & Managing Director, at a news conference here today.

Net profit would have been Rs 119.62 crore as against Rs 84.37 crore.

This growth was due to a rise in operating margins across segment, despite cost pressures, said a statement from the company.

Net sales rose by 12.8 per cent, to Rs 3,345 crore (Rs 2,965 crore); while total expenditure rose by 14.8 per cent, to Rs 3,296 crore (Rs 2,869 crore).

Under the various heads of expenditure, staff expenses at Rs 268.54 (Rs 200 crore) crore showed a significant increase of 34 per cent. Sales and administration expenses showed a hefty increase, of over 50 per cent, at Rs 417.18 crore (Rs 276.84 crore). So did cost of construction materials at Rs 679.51 crore (Rs 448.69 crore).

Net interest costs amounted to Rs 14.67 crore (Rs 13.31 crore). Depreciation, amortisation accounted for Rs 26 crore (Rs 22 crore).

Operating margins across segments rose, the E&C segment reporting an operating margin of 6 per cent, and the electricals segment, an operating margin of 16 per cent. Operating margins of the E&C segment, which contributes to the bulk of revenues, are expected to improve during the second half of the fiscal, said Mr Naik.

Revenues from the company's international operations accounted for 21 per cent of total sales, this being in keeping with the company's target, said Mr Naik.

Going ahead, operating margins are expected to show an increase, with the average operating margin in projects being in the range of 7 per cent and 9 per cent, said Mr Naik. This will be ensured by internal weighing of every project that L&T quotes for, said Mr Naik.

Strong oil prices that would make more exploration projects viable, a strong metals and minerals sector (due to Government banning export of ores), new orders from the Gulf region provide good opportunities for business, he said. The inflow of new orders for the E&C segment is expected to grow by 35 per cent this fiscal. The company's scrip fell on the stock exchanges losing Rs 45.75 on the BSE today. It closed at Rs 1,343, against the previous close of Rs 1,385.80.

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