The Hindu : Business : L&T announces 1:1 bonus

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Friday, May 30, 2008
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L&T announces 1:1 bonus

Ramnath Subbu

Net jumps 55 p.c. to Rs. 2,173.42 cr. in 2007-08
Recommends a
final dividend
of Rs. 15 per share

— PHOTO: SHASHI ASHIWAL

HEDGING AGAINST SLOWDOWN: A. M. Naik (left), Chairman and Managing Director, and V. M. Deosthalee, Chief Financial Officer, L&T, addressing a press conference in Mumbai on Thursday.

MUMBAI: In a difficult environment of rising costs, Larsen & Toubro (L&T) has announced a rise of 38 per cent in its net profit at Rs. 966.76 crore for the fourth quarter ended March 2008 against Rs. 700.77 crore in the corresponding period in the previous year. Excluding exceptional items of Rs. 87.23 crore (relating to profit on dilution of equity in a project), the net profit was up 27 per cent. For the quarter, the company’s gross sales and service revenues were up 35 per cent at Rs. 8,577.55 crore (Rs. 6,365.40 crore). Operating margins were up at 15.9 per cent (15.5 per cent) and order inflows grew 56 per cent.

For the whole of 2007-08, L&T has reported a 55 per cent rise in net profit at Rs. 2,173.42 crore (Rs. 1,403.02 crore) on a 40 per cent higher gross sales and service revenues of Rs. 25,187.48 crore (Rs. 17,900.59 crore). International operations accounted for 16.4 per cent of gross revenues, while order inflows rose by 37 per cent over the previous year.

The board of directors of the company has recommended a final dividend of Rs. 15 per share.

The company has already paid an interim dividend of Rs. 2 per share. The board has also recommended an issue of bonus equity shares in the ratio of 1:1 (one bonus equity share of Rs. 2 for every equity share held).

The operating profit for the year at Rs. 3,405 crore grew by 54 per cent which translates into an improvement in the operating margins by one percentage point at 13.6 per cent.

Strong infrastructure and industrial growth, buoyant market for capital the goods sector and a sound risk management framework contributed to the growth in the company revenues and profitability. Speaking on the impact of the economic slowdown at a press conference here on Thursday, A. M. Naik, Chairman and Managing Director, L&T, said, “L&T is organised into 15 companies and there is a fairly good hedge against a slowdown in any one sector with new operating companies in shipbuilding, power and railways.”

L&T is prepared for the Middle East and Gulf regions and “a slowdown in this region has been factored in so we are not changing our outlook.

As in the past we will see a 32-35-per cent growth and we will be able to maintain margins.”

On rising costs, Mr. Naik said, “we do not accept fixed price for project executions, in fact, of the new jobs last year, 60 per cent were accepted on the cost plus basis. About 20-25 per cent of our projects have to be on a firm price basis but then we take sufficient contingencies into account.”

L&T is not planning to list any group company immediately but will list its information technology, financial services and development projects holding company. In all likelihood, the IT company would list in 2009-10 and others would list in successive years, said Mr. Naik.

Realty push

L&T is present in the realty business through L&T Realty, a holding company for all realty projects which come up as special purpose vehicles (SPVs).

It is investing up to Rs. 4,000 crore in a project in Navi Mumbai which will come up around the Sea Woods Railway station, covering 40 acres. It will boast parking space for 6,000 vehicles, office buildings, malls, clubs and serviced apartments.

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