“It has been a very satisfactory quarter, there has been a welcome relief seen on the order inflow side with a growth of 38 per cent. We have been able to convert orders to revenue, seeing a 10 per cent growth in revenue," said Shankar Raman, whole time director and chief financial officer for L&T. Segments like infrastructure, hydrocarbon and heavy electrical contributed to the company’s revenue growth.
The company met street expectations. In a Bloomberg poll, 17 analysts estimated a consolidated net profit of Rs 14.05 billion. In November, L&T revised its order inflow guidance from 12 to 14 per cent growth in the current fiscal to year to flattish owing to a weak order inflow seen in the first two quarters. However, the company saw a rebound in orders in the December quarter leading to a 38 per cent growth in its order inflow seen at Rs 481.3 billion. With this, the company's total outstanding order book now stands at Rs 2.7 trillion. A larger chunk of these orders are from the domestic market, with L&T expecting to end the financial year with 75 per cent of its order book coming from the domestic market alone.
Despite the significant improvement in its order inflow, the company maintained its revised guidance of flat growth in order inflow and the 12 per cent growth in revenue for the current financial year. S N Subrahmanyan, chief executive officer and managing director for the company, pointed out, “It depends on three factors- one the budget which direction it is going to take, there could be a tilt to social sector and capex could be lower or same as the last year. The other is if oil moves up, for us the Middle East will be good. The third factor is it (2019) being the election year, the decision making could get slowed down. Since the private capital has slowed down, for us a lot will depend on government spending with the central elections and four state elections.”
In the quarter under review, the companies
also provisioned for receivables worth Rs 2 billion, which the company said, were claims pending with companies
going through the proceedings of National Company Law tribunal (NCLT) and other liquidation processes.
The engineering conglomerate also raised concerns over the modalities of the proposed toll operate transfer (TOT) model for road projects. The management said the TOT model in the current form is one-sided, favouring the Government with no provisions for termination, interest rate risks, non competing rights and assurance of state support as TOT is a Central government initiative.
Commenting on the company’s plans to list its road assets under the infrastructure investment trusts (InvIT) model in the current financial year, Shankar Raman added, ”There are two months more left for the year end, we are in the process and we should hopefully conclude it.”