Larsen and Toubro (L&T) on Wednesday registered a steep 68 per cent decline on an annual basis in net profit for the quarter ended June 30, 2020 as orders declined on the back of low interest towards fresh investments and delay in award decision. The engineering major posted a consolidated net profit of Rs 536.88 crore during the quarter under review, as opposed to Rs 1,697.62 crore in the corresponding quarter last year.
Consolidated revenue from operations in Q1 FY21 stood at Rs 21,259.97 crore, amounting to a 28.26 per cent decline from Rs 29,635.95 crore in the same quarter last fiscal. "Revenue was impacted by nation-wide lockdown, resulting in halting of manufacturing and construction activities, non-availability of labour and disruptions to the supply chain ecosystem. International revenues during the quarter at 9,497 crore constituted 45 per cent of the total revenue, with increased composition of the non-cyclical IT&TS segment," the company said in a regulatory filing.
L&T reported a Profit after Tax (PAT) of Rs 544 crore during June quarter of FY21, of which Rs 241 crore was allocated to non-controlling interest. The consolidated PAT attributable to shareholders of the Company, including profits from discontinued business, was Rs 303 crore, reflecting a decline of 79 per cent from Rs 1,473 crore for the corresponding period last year.
"The PAT was impacted mainly due to lower revenue, credit provisions in the Financial Services business and under recovery of overheads," L&T said.
The company saw orders decline 39 per cent during the first quarter of this fiscal. L&T bagged orders worth Rs 23,574 crore only, "in a quarter characterised by low interest towards fresh investment and deferment of award decisions". International orders at Rs 8,872 crore constituted 38 per cent of the total order inflow.
In its outlook for the coming days, L&T said that the domestic economy is likely to recover over the next few quarters with partial lifting of lockdown and graded resumption of business operations. "Ordering activity in roads, urban infra particularly health care, railways, water distribution and waste-water treatment and irrigation sub-segments are expected to pick up in the later part of the fiscal year," L&T said.
L&T also expressed concerns rearing their heads on the global fronts in the form of coronavirus pandemic, geopolitical disputes with China, increasing protectionist policies and weak oil prices. The company said it has been pursuing a multi-pronged strategy to address the economic crisis and returning to business normalcy, while adhering to government directives and ensuring safety of its customers, employees and contract staff.
"Labour availability and productivity, working capital levels, balance sheet health and pick-up in execution pace are constantly monitored. The Company's focus continues to be on responsible resumption, profitable execution of its large Order Book with higher operational efficiencies, liquidity management, tight expense control and successful transitioning to a new work environment," L&T said.