The Hindu Business Line : L&T posts 14 pc rise in Q2 net — Announces special dividend of Rs 10

EXCLUDING an extraordinary gain of Rs 353 crore, mainly from sale of shares in UltraTech Cemco to Grasim Industries, Larsen & Toubro (L&T) has reported a 14 per cent increase in net profit, excluding extraordinary items, for the second quarter of this fiscal.

Net profit for the quarter stood at Rs 92 crore, up from Rs 81.26 crore reported during the corresponding quarter of the previous fiscal.

When the extraordinary gain is taken into account, the net profit amounts to Rs 371.98 crore, which is 357 per cent higher, year-on-year. An additional extraordinary gain of Rs 8.65 crore came from sale of marketing rights to an associate company.

L&T has announced a special dividend of Rs 10 per share,the payout of which will amount to Rs 145 crore.

A combination of a lengthy election period, earlier this year, which delayed decisions on projects and resulted in fewer domestic opportunities, changes in policy environment, a steep increase in price of inputs such as steel and freight, and the cycle of booking profits on projects led to a 5 per cent operating margin only for the company during the quarter.

But this margin is higher than internally budgeted for this year, Mr A.M. Naik, Chairman and Managing Director, said at a news conference here today.

However, officials of the company said this fiscal should end with an operating margin of 8 per cent, given the profit booking cycle. "Our margin will be maintained. The fourth quarter of the previous fiscal, for example, had contributed to 40 per cent of the annual profit," Mr Y.M. Deosthalee, CFO, L&T, pointed out. Gross sales for the quarter at Rs 3,004 crore (Rs 2,104 crore) grew 43 per cent. Total expenditure increased by 39 per cent to Rs 2,866 crore, up from Rs 2,052 crore, the expenditure under almost every head showing an increase.

Net interest amounted to Rs 13.36 crore, up from Rs 4.76 crore (which was on account of interest gain which happened last year).

During the quarter, the largest segment, the engineering and construction division (E&C), booked new orders amounting to Rs 2,459 crore (Rs 3,213 crore). Gross revenues of this segment grew 48 per cent, with customer order backlog at Rs 16,432 crore.

For the six-month period, order booking at E & C stood at Rs 4,692 crore, of which export orders amount to Rs 1,096 crore.

The electrical and electronics segment's revenues were up 19 per cent, to Rs 301 crore, and reported an operating margin of 16.3 per cent.

For the half-year ended September 30, sales and service income grew 52 per cent to Rs 5,692 crore, while net profit amounted to Rs 173 crore, growing 19 per cent.

Giving the overall outlook for the current year, Mr Naik said that the government's stand on reform initiatives and infrastructure should lead to a 30 per cent increase in E&C revenues and significantly higher margins.